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https://ptsldigital.ukm.my/jspui/handle/123456789/485883| Title: | Fiscal sustainability and debt-growth nexus in Indonesia |
| Authors: | Miksalmina (P47092 ) |
| Supervisor: | Zulkefly Abdul Karim, Prof. Dr. |
| Keywords: | Fiscal policy -- Indonesia Finance -- Indonesia Finance Public -- Indonesia Universiti Kebangsaan Malaysia -- Dissertations Dissertations, Academic -- Malaysia |
| Issue Date: | 19-Nov-2019 |
| Description: | The persistent episode of debt in Indonesia has been concerned by policymakers and researchers, especially after the Asian crisis in 1997, the global crisis in 2008, and the sovereign debt crisis in 2010. Due to the continuous deficit experienced in Indonesia which creates debt, issues on the sustainability of fiscal policy and economic growth become important. The importance of recognizing fiscal position is to prevent fiscal unsustainability and negative effect on economic growth. Therefore, this study aims to investigate whether the sources of government debt, domestic (internal) and foreign (external) government debt, affect the fiscal sustainability differently. This may happen since internal and external government debt has different risks on fiscal sustainability. This study tries to examine fiscal sustainability through the appropriate response of fiscal reaction function. Thus, this study examines the sub-sample causality of debt and economic growth considering time variation in the causal relationship between debt and economic growth. Vector Error Correction Model (VECM) is a method used to analyse the impact of different sources of debt on fiscal sustainability. Meanwhile, Bootstrap Rolling Window (BRW) is a method that used to investigate the debt-growth nexus which accounts for the time-varying causal link between the two variables. The finding of this study found that there is a different effect of internal and external debt on fiscal sustainability. The total debt and external debt give a positive response on fiscal sustainability; meanwhile, the internal debt gives a negative response on fiscal sustainability. The reason for this response is due to the differences in cost borrowing on the national budget. The internal debt has more cost than external debt. Most of the external debt is required to fulfil the deficit budget through a soft loan with a low-interest rate and long term maturity. The allocation must be delivered to development spending. Meanwhile, internal debt has a higher interest rate and short term maturity, the domestic bond is issued in foreign currency, and thus the allocation could on operational or development spending. The next finding found that there is a sub-sample causality between debt ratio and economic growth. The policy implication of this study suggests the government of Indonesia need to decrease the interest rate lower than economic growth, then should avoid allocating new bond issuance on debt interest payment, and thus need to reduce bond issuing in foreign currency. Moreover, the government needs to examine the period that debt and economic growth have predictive power for each other. This is useful to give a positive impact of debt on economic growth.,��Certification of Masters/Doctoral Thesis�� is not available,Ph.D. |
| Pages: | 129 |
| Call Number: | HJ1374.M535 2019 tesis |
| Publisher: | UKM, Bangi |
| Appears in Collections: | Faculty of Economy and Management / Fakulti Ekonomi dan Pengurusan |
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