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Pandemic Shocks And Macro-Financial Policy Responses: An Estimated Dsge-Var Model For Indonesia

Author

Listed:
  • Advis Budiman

    (University of Indonesia, Indonesia)

  • Sugiharso Safuan

    (University of Indonesia, Indonesia)

  • Solikin M. Juhro

    (Bank Indonesi)

  • Febrio N. Kacaribu

    (University of Indonesia, Indonesia)

Abstract

This paper attempts to investigate the impact of policy mix in dealing with the COVID-19 pandemic. We employ the New Keynesian Dynamic Stochastic General Equilibrium (DSGE) framework and the Del Negro et al. (2007) approach to estimate the model. We investigate the effectiveness of policy mix in Indonesia by taking into account real and financial linkages, as well as other market imperfections. We intend to analyze and evaluate the adequacy of monetary, fiscal, and macroprudential policy by simulating each policy option using Indonesian-specific factors and comparing them. Our findings show that policy mix has a greater impact on accelerating economic recovery but does not necessarily lead to anchor inflation.

Suggested Citation

  • Advis Budiman & Sugiharso Safuan & Solikin M. Juhro & Febrio N. Kacaribu, 2022. "Pandemic Shocks And Macro-Financial Policy Responses: An Estimated Dsge-Var Model For Indonesia," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 25(3), pages 399-438, November.
    • Handle: RePEc:idn:journl:v:25:y:2022:i:3e:p:399-438
    DOI: https://doi.org/10.21098/bemp.v25i3.1981
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    Citations

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    Cited by:

    1. Julie Ann Q. Basconcillo, 2023. "A nexus between fiscal policy and inflation: a case study of Indonesia using SVAR model," Public Sector Economics, Institute of Public Finance, vol. 47(4), pages 477-503.

    More about this item

    Keywords

    Financial frictions; Policy mix; General equilibrium;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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