Identification of the Economic Crisis in Indonesia 2019-2022

Economic Journal of Emerging Markets

Purpose ― This paper estimates the possibility of a financial crisis in Indonesia using an early warning system (EWMS) model. Method ― A quantitative EWMS model has been developed to detect a potential financial crisis in 2023 based on the econometric logistic probability model (Logit) Findings ― Based on the model estimates, Indonesia is expected to enter a financial crisis without adequate macroeconomic policies in the next 12 to 24 months. In recent years, Indonesia has implemented prudent macroeconomic policies such as increasing the Bank Indonesia policy rate and sustaining the state budget to avoid the impact of a deep financial crisis. Implications ― To avoid the potential for further financial crises, Indonesia must implement a wider range of crisis mitigation policies. Originality/value ― Although many argue that financial crises are predictable, it has been demonstrated in the literature that little is known about how to prevent them. This paper contributes to providing em...

Journal of Physics: Conference Series, 2017

The severity of the financial crisis that occurred in Indonesia required an early warning system of financial crisis. The financial crisis in Indonesia can be detected based on imports, exports, and foreign exchange reserves. The purpose of the research is to determine an appropriate model to detect the financial crisis in Indonesia based on imports, exports, and foreign exchange reserves. Markov switching is an alternative framework for the approach often used in financial crisis detection. Combined volatility and Markov switching model with three states assumptions can be established if an AR and volatility models have been obtained. Imports, exports, and foreign exchange reserves data from January 1990 to December 2016 have the heteroscedasticity effect so that an ARCH model is used as a volatility model. Research shows that SWARCH(3.1) model is an appropriate model for detecting financial crisis in Indonesia based on imports, exports, and foreign exchange reserves.

Ekonomi Dan Keuangan Indonesia, 2009

The objective of the paper is to reconsider the so-called Temple Model of Financial Crises" (TMFC) by extending it to a model to detect financial crises. In this regard, the extended model will be applied to the Indonesian experience. As financial and banking crises in 1997 seriously affected Indonesia, the Indonesian economy contracted by -13%, the inflation rate jumped by 70% and domestic government debt skyrocketed by Rp 650 trillions. The model is a non-parametric approach, also known as signal approach. The result of this signaling approach is relatively adequate in the sense that the composite index sends a signal regarding the danger of upcoming financial crises -as shown in the cases of 1978, 1983, 1986 -with a 24 months window period. The performance of the model is satisfactory in terms of in-sample and out-of-sample evaluation using accuracy and calibration scores. Moreover, the model is much better able to forecast the 1997 crisis as well as the financial distress in August 2005 and in 2008. Therefore, the paper offers a useful combination of TMFC incorporating a signal approach.

Buletin Ekonomi Moneter dan Perbankan, 2010

This paper discusses the impact of global financial crisis to the Indonesia’s economy by using the simultaneous macro model approach. The analysis and simulation results of such model show that the impact of the global financial crisis is dominantly distributed through the trade line, which decreases the regional output. To the components of aggregate demand, the movement of exchange rate has major effect to the exports and imports, whereas to the consumption and investment, it gives relatively small effect. The impact of external shock, which causes the depreciation of Rupiah, is relatively small to the increase of inflation.JEL classification: C32, E44Keywords : Financial crisis, simultaneous model, Indonesia.

E3 Journal of Business Management and Economics, 2011

This paper aims to examine the Indonesian experiences with the 1997/98 Asian financial crisis and the 2008/09 global economic crisis. It has three main parts. The first part gives a theoretical explanation of the main transmission channels through which the two crises have affected the Indonesian economy. It also provides a list of key indicators of these types of economic crises. The second part is the empirical part about the impacts of the crises on economic growth, employment, remittances and poverty in Indonesia. One important finding from this study is that the Indonesian economy was much more resilient to the last crisis as compared to the first crisis. During the first crisis, Indonesian economic growth was negative and poverty increased significantly; whereas during the second one, Indonesia managed to keep a positive economic growth rate (though declined), and poverty kept declining. The third part provides a list of main reasons for the difference, and sound banking sector after the first crisis is among the list.

Jurnal Riset Pendidikan Ekonomi, 2021

This study aims to review Indonesia's macroeconomic indicators before and during the covid-19 pandemic. Using time-series data sourced from ceicdata, this study uses non-parametric statistical methods of different tests (sign tests). The results showed that there is a significant difference between before and during the covid-19 pandemic on international macroeconomic indicators of the rupiah exchange rate against USD, external debt, reserves, and Indonesian CPI. Recommended to the Government of Indonesia through Bank Indonesia and other relevant Ministries need a strict policy on a rupiah exchange rate that leads to price stability to reduce the rate of inflation, management and disclosure of external debt information, the achievement of trade balance surplus to increase reserves towards increasing domestic economic growth.

Indonesian Journal of Multidisciplinary Sciences (IJoMS)

Court Developing countries tend to experience inflation, countries with inflation below 3% are still on the normal threshold for a country (stebisgm, 2015) but conversely a country with high and unstable inflation is a reflection of economic instability which results in a general and continuous increase in the level of prices for goods and services in a country and results in higher levels of poverty and unemployment. In this study we used a quantitative method using time series data from 2015 to 2021 and carried out statistical calculations using SPSS.. Results According to the study, the inflation rate is 3532 > 2306. The significance level is 0.039 <0.05, which means that inflation affects Indonesia's economic growth/gross domestic product (GDP). Even though the management of the state's economy cannot be separated from the state, including Indonesia from the countries affected by the state. However, the monetary and fiscal policies implemented in each country vary ...

1998

China-USA Business Review

The debt crisis in the European Union (EU) and the U.S. has significant potential impact on the economy of Indonesia. U.S. sub-prime mortgage crisis in 2008 has a strong impact on Indonesian economy, that Indonesia's gross domestic product (GDP) slowed down to below 5% during 2009. Until October 2012, Indonesia's export growth is starting to grow negatively on some sectors when the crises in the EU and the U.S. have started or overall grew by-6%. Although the slowdown does not occur in all sectors, the impact spreads to other sectors as the existence of industrial linkage among sectors. The objective of the study is to look at the impact on the sector level on various indicators such as GDP (value added) and employment. Input-output analysis will be used in the simulation. Indonesia input-output table of 2005 is applied as the data base. The simulation results show that if exports decline occurs in the U.S., the economic growth will be-0.20%. Meanwhile, if it occurs in the EU, the growth of GDP will be-0.24%. If some Asian countries face the fall of demand of Indonesian export, GDP growth declines by 0.61%. The fall of exports demand from some Asian countries, EU countries and the U.S. will cause the GDP growth by-1.06%. The crisis occurring in both the US and the EU has decreased export demand from those countries and region including some Asian countries. The impact to employment seemed to be minimal, only-0.47% of total labour force.

Journal of Physics: Conference Series, 2018

The currency crisis that occurred in the middle of 1997, 1998 and 4 th quarter of 2008 was caused by disturbances in the currency system. When there is disturbance in the system then the cause indicators will experience fluctuations and changes in conditions. High fluctuation can be modeled using volatility model, while the changes in condition can be modeled using Markov switching model. Therefore, combination of volatility and Markov switching models is very appropriate to explain the crisis. In this paper, we use real output and ICI indicators on the period of January 1990 until December 2016 to explain the crisis as well as to forecast the possibility of an impending crisis. The results show that the appropriate model is ARCH (1) and Markov switching with 3 states, called SWARCH (3,1) model. This model can catch the crisis that happened in