BEMP Volume 14 Number 4, April 2012 - Bank Sentral Republik Indonesia
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August 25, 2019

QUARTERLY ANALYSIS I - 2012

The Indonesian economy in the First Quarter 2012 grew by 6.3% (yoy). The main source of economic growth came from domestic consumption thatremained strong and in line with consumer optimism (which also remained high), and investments (PMTB) supported by a  conducive business climate with the potential for increased funding. Meanwhile, export growth slowed down due to the performance of the continuing global economic downturn which has depressed the absorption of the main trading partner countries. Amid the sluggish performance of exports, imports still grew fuelled by a strong domestic demand. Looking ahead, Indonesia's economic outlook remains strong overall in 2012 ranging from 6.3 to 6.7% growthamidst many risk factors...

OFFSHORE AND ONSHORE IDR MARKET: AN EVIDENCE ON INFORMATION SPILLOVER
by Yayat Cadarajat and Alexander Lubis

Abstract

This paper investigates the information transmission between off-shore and on-shore Rupiah currency markets Indonesian. We found the evidence of persistent volatility in all IDR/USD markets. Using EGARCH model on daily data for the period of 2008 - 2011, this paper provide several empirical conclusions. First, the persistent volatility in all IDR/USD currency markets is evident. Second, the leverage effects are present in the rupiah exchange rates, indicating that IDR/USD markets have responded more to depreciation than appreciation, which is generally common in emerging market currencies. Third, the evidence of mean spillover are observed to be uni-directional; from NDF to both spot and forward rupiah markets. However, there are two ways return transmission between NDF and forward rate changes in the period of Europe crisis. Fourth, on the volatility, the spillover is only significant from NDF market to spot market for the entire period. However, in the time of crises, there is interdependence between volatility in offshore NDF and onshore spot rate changes, while information transmission is only valid from NDF to forward rate changes, not the other way around. Fifth, the negative spread of domestic interest rate may lead to depreciation pressure on the currency and positive spread may indicate the appreciation pressure.

Keywords: Foreign Exchange, Non-Deliverable Forward, exchange rate, spillover, EGARCH.
JEL Classification: F31, G13, C51

REDUCING POVERTY THROUGH SUBSIDIES: SIMULATION OF FUEL SUBSIDY DIVERSION TO NON-FOOD CROPS
by Indra Maipita, Wawan Hermawan, Fitrawaty

Abstract

This paper analyzes the impact of fuel subsidy diversion to Non-Food Crops sector on income levels, using AGEFIS; a Computable General Equilibrium model. Then we proceed to apply the Foster-Greer-Thorbecke (FGT) index to measure the indicators of poverty (head count index, poverty gap index and poverty severity index). The simulation result shows the fuel subsidy diversion to Non-Food Crops sector provides a positive impact on increasing household incomes and poverty reduction. Furthermore, the fuel subsidy diversion to Non-Food Crops sector reduces the poverty of rural household, larger than the urban households.

Keywords: Subsidy, poverty, computable general equilibrium, AGEFIS.
JEL Classification: C68, E62, I32

THE IMPACT OF FISCAL POLICY ON THE OUTPUT AND INFLATION
by Ndari Suryaningsih, G.A. Diah Utari, Budi Trisnanto

Abstarct

This study examines the impact of fiscal policy on output and inflation, along with a look at discretionary fiscal policy and how it impacts the volatility of output and inflation. Model Vector Error Correction Model (VECM) was applied over quarterly data, covering the period 1990 to 2009. Empirical results showed that there is a cointegration relationship between government spending and taxes with respect to output in the long-run.Unlike government spending, in the long-term, taxation has a positive effect on economic growth. Short-term adjustment suggests that anincrease in government spending has a positive effect on output, while a tax increase has a negative effect. There is a greater influence of government spending on output in the short term compared to taxation policies. Therefore, government spending is more effective to stimulate economic growth especially in times of recession, compared to taxation policies. While the increase in government spending causes a decrease in inflation, tax increases lead to higher inflation. This study also indicates the absence of discretionary fiscal policy made by the government of Indonesia.

Keywords : Inflation, output, fiscal policy, tax, discretionary, VECM.
JEL Classification: E31, E62

SURVEY MEASURES OF INFLATION EXPECTATION
by Endy dwi Tjahjono, Harmanta, Nur M. Adhi Purwanto

Abstract

>The research objective was to analyze various survey measures of inflation expectation in Indonesia. We found that the heterogeneity of inflation expectationamong economic agents and professional forecastersfor short forecast horizon is very low. Survey measures of inflation expectation appear to be forward looking, but only for relatively short horizon. Although the magnitude and length vary across measures of inflation expectation, we find that shock to inflation expectation significantly affect the dynamics of the actual inflation rate. Based on the accuracy, the effect on actual inflation and directional information that they have in predicting current and future inflation, inflation expectation from Consensus Forecast outperformed the others.

Keywords: Inflation expectation, Vector Auto Regression, balanced score.
JEL Classification: C42, E31.

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