Document Type
Article
Abstract
The purpose of this research is to observe the impact of the budget deficit policy on the macroeconomic variables in general, and specifically on the monetary variables in the short and long run.We apply macroeconomic model with rational expectation specification to allow agents altering their economic decision in encountering the authority policies. The model constructed contains eight (8) long run behavior equations, eight (8) short run behavior equations, four (4) rational expectation equations, and at least twelve (12) identity equations. The parameters are estimated by using the Two Stage Least Squares (2SLS) method. The endogenous variables which has become the independent variables are replaced by the instrument al variables. The instrumental variables are obtained from the reduced form structural equations.The statistical test on the impact of budget deficit on monetary variables are conducted by using reduced form equations and causality test. Both of the tests show that budget deficit through the government revenue mechanism affects the interest rate in the short and long run. In the short run through government expenditure mechanism, budget deficit would affect the exchange rate and price level. In the long run, however, causality tests show that the exchange rate and price level would in turn affect the budget deficit.Keywords: macro model, monetary policy, fiscal budgetJEL: B22, D84, E44, E63
Recommended Citation
Maryatmo, R.
(2004)
"DAMPAK MONETER KEBIJAKAN DEFISIT ANGGARAN PEMERINTAH DAN PERANAN ASA NALAR DALAM SIMULASI MODEL MAKRO-EKONOMI INDONESIA (1983:1-2002:4),"
Bulletin of Monetary Economics and Banking: Vol. 7:
No.
2, Article 1.
DOI: https://doi.org/10.21098/bemp.v7i2.112
Available at:
https://bulletin.bmeb-bi.org/bmeb/vol7/iss2/1
First Page
297
Last Page
322
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Country
Indonesia
Affiliation
Universitas Gadjah Mada
