IS THE AUTOMATIC STABILIZER POLICY EFFECTIVE INCOMBATING AN ECONOMIC RECESSION?A CASE STUDY OF THE INDONESIAN STATE BUDGET

Authors

Cucun Ahmad Syamsurijal, Padjadjaran University, Indonesia.Follow
Yogi Suprayogi Sugandi, Padjadjaran University, Indonesia.Follow
Asep Sumaryana, Padjadjaran University, Indonesia.Follow
Slamet Usman Ismanto, Padjadjaran University, Indonesia.Follow

Document Type

Article

Abstract

This paper examines the effectiveness of an automatic fiscal policy in dealing with an economic recession in Indonesia. By using a mixture of quantity and quality approaches, we find that the automatic stabilizer policy can be used in Indonesian state finances, whereby several components of state revenue, namely income tax, consumption tax, excise, and non-tax revenue, have elasticity of more than one. In comparison, only one component of government spending, namely interest payment, has an elasticity of more than one. We also find that activating the automatic stabilizer policy requires a particular article in the State Finance Law, that regulates when the automatic stabilizer instrument, to be used. These findings open an additional avenue for understanding the effectiveness of policy stimulus to combat the COVID-19 pandemic.

Recommended Citation

Syamsurijal, Cucun Ahmad; Sugandi, Yogi Suprayogi; Sumaryana, Asep; and Ismanto, Slamet Usman (2023) "IS THE AUTOMATIC STABILIZER POLICY EFFECTIVE INCOMBATING AN ECONOMIC RECESSION?A CASE STUDY OF THE INDONESIAN STATE BUDGET," Bulletin of Monetary Economics and Banking: Vol. 26: No. 0, Article 4.
DOI: https://doi.org/10.59091/1410-8046.2056
Available at: https://bulletin.bmeb-bi.org/bmeb/vol26/iss0/4

First Page

55

Last Page

76

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Country

Indonesia

Affiliation

Padjadjaran University