TRIPLE SHOCK ON EXTERNAL SUSTAINABILITY IN INDONESIA

Aloysius Deno Hervino (), Insukindro (), Sekar Utami Setiastuti () and Amirullah Setya Hardi ()
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Aloysius Deno Hervino: Atma Jaya Catholic University of Indonesia, Indonesia
Insukindro: Universitas Gadjah Mada, Indonesia
Sekar Utami Setiastuti: Universitas Gadjah Mada, Indonesia
Amirullah Setya Hardi: Universitas Gadjah Mada, Indonesia

Bulletin of Monetary Economics and Banking, 2025, vol. 28, issue 2, 217-228

Abstract: This study evaluates Indonesia’s external sustainability by analyzing exports, imports, and net unilateral transfer payments. The study utilizes Indonesia’s data from the third quarter of 2005 to the fourth quarter of 2019, applying both a long-run dynamic model and a short-run forward-looking model incorporating triple shocks. This research excludes the period from 2020 onwards due to the economic upheaval in Indonesia resulting from the COVID-19 outbreak. This study concludes that Indonesia’s current account is unsustainable, as neither export nor import variables exhibit a long-term link, hence failing to meet intertemporal budget constraints. Furthermore, imports substantially influence long-term exports, which increase at a slower rate than imports.Economic variations and global oil price volatility also affect exports.

Keywords: External sustainability; Economics fluctuation; Exchange rate; World oil price; DOLS; FLM (search for similar items in EconPapers)
JEL-codes: E31 E37 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:28:y:2025:i:2c:p:217-228

DOI: 10.59091/2460-9196.2512

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