Debt dynamics and fiscal sustainability: A lesson from post asian financial crisis

Elsyan Rienette Marlissa; Ari Warokka

Debt dynamics and fiscal sustainability: A lesson from post asian financial crisis

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Elsyan Rienette Marlissa, Ari Warokka

2013 Vision 2020: Innovation, Development Sustainability, and Economic Growth - Proceedings of the 21st International Business Information Management Association Conference, IBIMA 2013 Vol. 2 Conference paper Cited by 0

Abstract

This paper is designed to analyze the behavior of fiscal stance in the case of Indonesia over the period of 1999-2009. First, we explore the literature on the debt dynamics as well as fiscal sustainability. Second, we develop a model of fiscal stance. Finally, we estimate it empirically. Based on the quarterly data analysis, we found that the fiscal stance is still remarkably backed up by debt. Furthermore, the fiscal stance is very vulnerable to the macroeconomic variables. Surprisingly, Rupiah depreciation did not contribute to the change in the primary balance. We conclude that those findings are associated with the currency stabilization conducted by central bank. © 2013 International Business Information Management Association.

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Faculty of Economics, Cenderawasih University, Indonesia; State University of Jakarta, Indonesia

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