Article Sidebar

Submitted
December 1, 2022
Accepted
July 3, 2023
Published
July 8, 2023
Download
PDF
Statistic
Read Counter : 170 Download : 112

Downloads

Download data is not yet available.

Main Article Content

Abstract

Indonesia's debt is increasing and is not controlled properly, which will result in a fiscal budget deficit. This study aims to determine the condition of fiscal sustainability in Indonesia by looking at the factors that affect the debt-to-GDP ratio in 2012 Quarter I to 2022 Quarter II. Fiscal sustainability can be seen from the debt-to-GDP ratio proxy variable and the independent variables used are the previous quarter's debt ratio, economic growth, inflation, and the exchange rate. This research is a qualitative type with a brief descriptive about the state of the debt ratio and the variables that influence it and quantitatively using the Error Correction Mechanism (ECM) using statistical software called EViews. The results show that in the long term the debt-to-GDP ratio in Indonesia is significantly influenced by the previous quarter's debt ratio, economic growth, inflation, and the exchange rate. Meanwhile, in the short term, changes in the debt to GDP ratio are significantly influenced by changes in the debt ratio in the previous quarter, changes in economic growth, and changes in inflation.

Keywords

Fiscal Sustainability Debt ECM Indonesia

Article Details

License

Authors who publish with this journal agree to the terms:

Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution-ShareAlike 4.0 International License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.

Creative Commons License

Jurnal Ekonomi Pembangunan is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License..

How to Cite
Laura, G. D., Chasanah, R. N., Faridah, N., & Kartiasih, F. (2023). Assessing Fiscal Sustainability in Indonesia: Error Correction Mechanism Diagnostic. Jurnal Ekonomi Pembangunan, 21(1), 49–60. https://doi.org/10.29259/jep.v21i1.19624
Download Citation
Endnote/Zotero/Mendeley (RIS)
BibTeX

References

  1. Adiyanta, F. S. (2020). Fleksibilitas Pajak sebagai Instrumen Kebijaksanaan Fiskal untuk Mengantisipasi Krisis Ekonomi sebagai Akibat Dampak Pandemi Covid-19. Administrative Law and Governance Journal, 3(1), 162–181. https://doi.org/10.14710/alj.v3i1.162-181
  2. Agyeman, G., Sakyi, D., & Fosu Oteng-Abayie, E. (2022). External Debt and Economic Growth in Selected sub-Saharan African countries: The Role of Capital Flight. Research in Globalization, 5(May), 100091. https://doi.org/10.1016/j.resglo.2022.100091
  3. Adwendi, S. J., & Kartiasih, F. (2016). Penggunaan Error Correction Mechanism dalam Analisis Pengaruh Investasi Langsung Luar Negeri Terhadap Pertumbuhan Ekonomi Indonesia. Statistika: Journal of Theoretical Statistics and Its Applications, 16(1), 17–27. https://doi.org/10.29313/jstat.v16i1.1767
  4. Afonso, A., & Alves, J. (2023). European Journal of Political Economy Does government spending efficiency improve fiscal sustainability ?. European Journal of Political Economy, 102403. https://doi.org/10.1016/j.ejpoleco.2023.102403
  5. Afonso, A., & Jalles, J. T. (2014). A Longer-Run Perspective on Fiscal Sustainability. Empirica, 41(4), 821–847. https://doi.org/10.1007/s10663-013-9240-0
  6. Basorudin, M. (2019). Analisis Kesinambungan Fiskal Indonesia Pasca Krisis Ekonomi. Jurnal Ekonomi Pembangunan, 17(2), 59–70. https://doi.org/10.29259/jep.v17i2.9792
  7. Bisogno, M., Cuadrado-Ballesteros, B., & García-Sánchez, I. M. (2017). Financial Sustainability In Local Governments: Definition, Measurement, And Determinants. Financial sustainability in public administration: Exploring the concept of financial health, 57-83. https://doi.org/10.1007/978-3-319-57962-7_3
  8. Brady, G. L., & Magazzino, C. (2018). Fiscal Sustainability in the EU. Atlantic Economic Journal, 46(3), 297–311. https://doi.org/10.1007/s11293-018-9588-4
  9. Buckle, R. A., & Cruickshank, A. A. (2014). The Requirements for Fiscal Sustainability in New Zealand. New Zealand Economic Papers, 48(2), 111–128. https://doi.org/10.1080/00779954.2013.874393
  10. Bui, D.-T. (2019). Fiscal Sustainability in Developing Asia – New Evidence from Panel Correlated Common Effect Model. Journal of Asian Business and Economic Studies, 27(1), 66–80. https://doi.org/10.1108/jabes-01-2019-0001
  11. Cahyaningrum, H., Nadzeva, G., Ramadhani, N. T., & Nurdiansyah, D. H. (2022). Analisis Faktor – Faktor yang Mempengaruhi Utang Luar Negeri di Indonesia Tahun 2015-2019. Wacana Ekonomi (Jurnal Ekonomi, Bisnis Dan Akuntansi), 21(1), 39–54. https://doi.org/10.22225/we.21.1.2022.39-54
  12. Cevik, S., & Nanda, V. (2020). Riding The Storm: Fiscal Sustainability in the Caribbean. International Review of Applied Economics, 34(3), 384–399. https://doi.org/10.1080/02692171.2020.1749241
  13. Checherita-Westphal, C., Hughes Hallett, A., & Rother, P. (2014). Fiscal Sustainability Using Growth-Maximizing Debt Targets. Applied Economics, 46(6), 638–647. https://doi.org/10.1080/00036846.2013.861590
  14. Choi, S., Furceri, D., Loungani, P., Mishra, S., & Poplawski-Ribeiro, M. (2018). Oil Prices and Inflation Dynamics: Evidence from Advanced and Developing Economies. Journal of International Money and Finance, 82, 71–96. https://doi.org/10.1016/j.jimonfin.2017.12.004
  15. Chua, C. L., Perera, N., & Suardi, S. (2021). Fiscal Regimes and Fiscal Sustainability In Sri Lanka. Applied Economics, 53(21), 2384–2397. https://doi.org/10.1080/00036846.2020.1859456
  16. Corsetti, G., Dedola, L., Jaroci?ski, M., Ma?kowiak, B., & Schmidt, S. (2019). Macroeconomic stabilization, monetary-fiscal interactions, and Europe’s monetary union. European Journal of Political Economy, 57(June 2018), 22–33. https://doi.org/10.1016/j.ejpoleco.2018.07.001
  17. Drakes, L., Thomas, C., Craigwell, R., & Greenidge, K. (2012). Threshold Effects of Sovereign Debt: Evidence from the Caribbean. IMF Working Paper No. 12/157.
  18. Hazmi, Y., Nazamuddin, Masbar, R., & Abdullah, S. (2019). Analysis of Subsidies, Inflation, Exchange Rates, BI Rates on Fiscal Sustainability in Indonesia. International Journal of Social Science and Economic Research, 4(3), 2049–2074.
  19. ?mrohoro?lu, S., Kitao, S., & Yamada, T. (2019). Fiscal sustainability in Japan: What to Tackle? Journal of the Economics of Ageing, 14(August). https://doi.org/10.1016/j.jeoa.2019.100205
  20. Insukindro. (2018). The Effect of Twin Shock on Fiscal Sustainability in Indonesia. Economics and Sociology, 11(1), 75–84. https://doi.org/10.14254/2071-789X.2018/11-1/5
  21. Kamiguchi, A., & Tamai, T. (2023). Public Investment, National Debt, and Economic Growth: The Role of Debt Finance Under Dynamic Inefficiency. Journal of Macroeconomics, 77(May), 103535. https://doi.org/10.1016/j.jmacro.2023.103535
  22. Kilian, L., & Zhou, X. (2022). The Impact of Rising Oil Prices on U.S. Inflation And Inflation Expectations in 2020–23. Energy Economics, 113(September), 106228. https://doi.org/10.1016/j.eneco.2022.106228
  23. Ko, H. (2020). Measuring Fiscal Sustainability in the Welfare State: Fiscal Space as Fiscal Sustainability. International Economics and Economic Policy, 17(2), 531–554. https://doi.org/10.1007/s10368-019-00453-2
  24. Muqorrobin, Y. (2015). Factors Influencing Economic Growth In Indonesia: Error Correction Model (ECM). Jurnal Ekonomi dan Studi Pembangunan, 16(1), 1-13.
  25. Nakatani, R. (2021). Fiscal Rules for Natural Disaster? and Climate Change?Prone Small States. Sustainability (Switzerland), 13(6), 3135. https://doi.org/10.3390/su13063135
  26. Pamungkas, R. H. (2017). Estimation of Indonesia’s Fiscal Reaction Function. Kajian Ekonomi Dan Keuangan, 20(1), 1–18. https://doi.org/10.31685/kek.v20i1.178
  27. Perkins, D. H., Radalet, S., Lindauer, D. L., & Block, S. A. (2017). Economics of Development. New York: W. W. Norton & Company.
  28. Pradhan, K. (2019). Analytical framework for fiscal sustainability: A review. Review of Development and Change, 24(1), 100-122. https://doi.org/10.1177/0972266119845951
  29. Rahman, Y. A., Rahmayani, D., & Hapsoro, B. B. (2023). Public Debt Sustainability in Indonesia after Financial Crisis and During COVID-19 Pandemic. Planning, 18(1), 229-235.
  30. Reinhart, C. M., & Rogoff, K. S. (2010). Growth in a Time of Debt. NBER Working Paper No. 15639.
  31. Reiss, L. (2014). Fiscal vulnerability using growth-maximizing debt targets. Applied Economics, 46(6), 648–649. https://doi.org/10.1080/00036846.2013.861591
  32. Roy, A. (2023). Nexus between economic growth, external debt, oil price, and remittances in India: New insight from novel DARDL simulations. Resources Policy, 83(February), 103742. https://doi.org/10.1016/j.resourpol.2023.103742
  33. Rusdiyantoro, I., & Simanjuntak, R. A. (2022). Kesinambungan Fiskal Indonesia Pada Masa Pandemi Covid-19. Jurnal Pajak dan Keuangan Negara, 4(1), 20–29. https://doi.org/10.31092/jpkn.v4i1.1706
  34. Sakuragawa, M., & Hosono, K. (2011). Fiscal sustainability in Japan. Journal of the Japanese and International Economies, 25(4), 434–446. https://doi.org/10.1016/j.jjie.2011.10.002
  35. ?en, H., & Kaya, A. (2015). Is fiscal policy really sustainable in Turkey? A reexamination. International Journal of Sustainable Economy, 7(1), 1-29. https://doi.org/10.1504/ijse.2015.066398
  36. Simanungkalit, E.F.Br. (2020). Pengaruh Inflasi terhadap Pertumbuhan Ekonomi di Indonesia. Journal of Management (SME’s), 13(3), 327-340. https://doi.org/10.35508/jom.v13i3.3311
  37. Sriyana, J., & Hakim, A. (2017). Balance Sheet Approach for Fiscal Sustainability in Indonesia. International Journal of Economics and Financial Issues, 7(1), 68–72.
  38. Todaro, M. P., & Smith, S. C. (2014). Economic Development (12 ed.). New York: Pearson.
  39. Wei, G., Asghar, N., Ahmad, I., Yin, W., Abbas, Q., Rahman, S., & Farooq, F. (2021). Economic Growth, Fiscal Imbalance, and Environmental Sustainability: What is Desirable and Undesirable for Developing Economies? Environmental Science and Pollution Research, 28(37), 52283–52294. https://doi.org/10.1007/s11356-021-14379-3
  40. Zhang, W. (2022). China’s Government Spending and Global Inflation Dynamics: The Role Of The Oil Price Channel. Energy Economics, 110(March), 105993. https://doi.org/10.1016/j.eneco.2022.105993

Similar Articles

1 2 > >> 

You may also start an advanced similarity search for this article.