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Macroeconomic Structural Change in Indonesia: in The Period of 1990 to 2011

Author(s): Muhammad Yunanto | Henny Medyawati

Journal: International Journal of Trade, Economics and Finance
ISSN 2010-023X

Volume: 4;
Issue: 3;
Start page: 98;
Date: 2013;
Original page

Keywords: Mundell-Flemming model | fiscal policy | monetary policy.

The purpose of this study is to analyze the structural changes in the Indonesian economy in relation to the implementation of fiscal and monetary policy on output variables (GDP). Model in this study is the simultaneous equations model which consists of 11 equations. Analysis was done through short-term estimation with Error Correction Model (ECM) and long-term estimates by Two Stage Least Square (TSLS). The estimation results indicate that the variable interest rates have a positive impact on the strengthening of the exchange rate. Fiscal policy and monetary policy is an integral part of macroeconomic policy has a target to be achieved in both the short and long term. Fiscal policy which may result in increase in the rate of inflation, otherwise the economy with high inflation rates also negatively affect the increase in Gross Domestic Product.
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