Did the policy responses influence credit and business cycle co-movement during the COVID-19 crisis? Evidence from Indonesia

K.P. Prabheesh, Aryo Sasongko and Fiskara Indawan

Economic Analysis and Policy, 2023, vol. 78, issue C, 243-255

Abstract: This paper examines the responses of credit and business cycle to various policy actions of the Government of Indonesia during the COVID-19 crisis. Specifically, the paper addresses two key questions (1) How do the credit and business cycle behave during the COVID-19 crisis in Indonesia? (2) Do the central bank and government policy responses effectively stabilize the credit and business cycle? Using the concordance Index and DCC-GARCH methodology, we found that the COVID-19 crisis increased Indonesia’s credit and business cycle co-movements. Similarly, using the mixed data sampling regression technique, our findings suggest fiscal policy measures and government support help the business cycle revival during the COVID-19 pandemic. However, the monetary policy transmission is weak during the pandemic

Keywords: Covid-19; Business cycle; DCC-GARCH; Fiscal policy; Monetary policy (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:78:y:2023:i:c:p:243-255

DOI: 10.1016/j.eap.2023.02.007

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