DynamicEffects of Fiscal Policies on Output,Consumption, and UnemploymentIn Indonesia
HARAHAP, LUKMAN ZAINUL HAKIM (Adv.: Professor Hiroaki Miyamoto), Professor Hiroaki Miyamoto
This paper studiesthe effectsoffiscal policieson economic growth, private consumption,andunemploymentin Indonesia. By using Vector Autoregressive (VAR) modeldemonstrates that an increase in government expenditure boostsoutput and positively affects private consumption. Meanwhile a positive tax shocksdecrease output and negatively affectslevel of private consumption. Thevariance decomposition result shows that increasing the government expenditure has the greatest impact to boosts economic growth than tax cut policy. Furthermore,fiscal policy, either byexpenditure policy or tax cut policy hasbeen proven ineffective in reducing the unemployment rate.
Kata Kunci : Fiscal Policy, GDP growth, Unemployment, Government spending, Taxes.
