PANDEMIC SHOCKS AND MACRO-FINANCIAL POLICY RESPONSES: AN ESTIMATED DSGE-VAR MODEL FOR INDONESIA

Advis Budiman (), Sugiharso Safuan (), Solikin Juhro and Febrio N. Kacaribu ()
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Advis Budiman: University of Indonesia, Indonesia
Sugiharso Safuan: University of Indonesia, Indonesia
Febrio N. Kacaribu: University of Indonesia, Indonesia

Bulletin of Monetary Economics and Banking, 2022, vol. 25, issue 3, 399-438

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.

Keywords: Financial frictions; Policy mix; General equilibrium (search for similar items in EconPapers)
JEL-codes: E12 E52 E63 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:25:y:2022:i:3e:p:399-438

DOI: 10.21098/bemp.v25i3.1981

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