Debt and Consumption in Indonesia: Ricardian Equivalence Approach

Issues on Inclusive Growth in Developing Countries

View Publication Info
 
 
Field Value
 
Title Debt and Consumption in Indonesia: Ricardian Equivalence Approach
 
Creator Ayunasta, Prasda
Setiaji, Bambang
Hakim, Lukman
 
Description Debt is a problem that is often discussed in all countries, especially for countries that are experiencing financial difficulties. The Asian crisis that occurred in 1998 and the global crisis in 2008 had a negative impact especially for Indonesia. This caused Indonesia to carry out foreign debt to save the economy. This research applies the Ricardian Equivalence concept in foreign debt problems in Indonesia. Ricardian Equivalence argues that current government debt will be a burden on public expenditure in the coming year. But assuming that the community behaves rationally, the foreign debt burden will not affect the consumption of the community. This study uses secondary data on household consumption, government foreign debt, gross domestic product, tax revenues, central government expenditures, and government budget deficits with the Impulse Response Function (IRF) method and Variance Decomposition with quarterly data from the first quarter of 1997 - fourth quarter 2017. Overall, if viewed from foreign debt, the Ricardian Equivalence does not apply in Indonesia after the Asian crisis in 1998 because foreign debt has an influence on public consumption. Conversely, after the global crisis in 2008 the Ricardian Equivalence prevails in Indonesia because foreign debt has no influence on public consumption.
 
Publisher Issues on Inclusive Growth in Developing Countries
 
Contributor
 
Date 2020-02-16
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://journal.iseisolo.org/index.php/isei/article/view/5
 
Source Issues on Inclusive Growth in Developing Countries; Vol 1, No 01 (2020): Februari 2020; 49-60
2721-4400
2721-4419
 
Language eng
 
Relation http://journal.iseisolo.org/index.php/isei/article/view/5/5
 
Rights Copyright (c) 2020 Issuees on Inclusive Growth in Developing Countries
 

Contact Us

The PKP Index is an initiative of the Public Knowledge Project.

For PKP Publishing Services please use the PKP|PS contact form.

For support with PKP software we encourage users to consult our wiki for documentation and search our support forums.

For any other correspondence feel free to contact us using the PKP contact form.

Find Us

Twitter

Copyright © 2015-2018 Simon Fraser University Library