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How effective is capital flow management? The Indonesian experience

Wishnu Mahraddika

Departmental Working Papers from The Australian National University, Arndt-Corden Department of Economics

Abstract: This paper reviews capital flow management (CFM) policy in Indonesia and examines its effectiveness from 2000 to 2019. The methodology involves constructing a new capital flow management policy restrictiveness index (CFMIX) and examining impulse responses of these flows to CFMIX adjustments through structural vector auto-regression (SVAR) estimation. The index shows that the Indonesian CFM policy stance has been more accommodative of capital inflows and restrictive on outflows over time. The results indicate that capital inflows in the form of portfolio investment are significantly responsive to CFM measures. However, there is no evidence of significant impact of CFM policy on outflows.

Keywords: Capital flows; capital flow management; Indonesia (search for similar items in EconPapers)
JEL-codes: F21 F32 F36 F41 G15 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2021
New Economics Papers: this item is included in nep-mon and nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:pas:papers:2021-15

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