Is foreign saving a blessing or a menace :: A pre crisis study of Indonesian economy by using computable general equilibrium

YASNI, Raynal, Prof. Takahiro Akita

2009 | Tesis | S2 Magister Ekonomika Pembangunan

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This paper examines the effect of dependence on foreign saving to the Indonesian economy prior to financial crisis in 1997 by using Computable General Equilibrium (CGE). Since the effect as well as the amount of foreign savings is crucial to the Indonesian economy, a comprehensive analysis of foreign savings can be measured through simulations that capture realistic conditions. The use of a CGE approach permits us to measure the effect of changes in the amount of foreign savings on some macro indicators in the economy as well. The simulation method allows us to compare the situations before and after the changes in the amount of foreign savings, and also to evaluate the effect of several shocks such as an economic crisis. The focus of the study is on Indonesia, especially during the economic crisis in late 1990s. Therefore, the Indonesian Social Accounting Matrix of year 1995, which is just before the crisis, is used. The paper will particularly evaluate the effect of the crisis on growth, prices, the exchange rate, income, and consumption of final output goods. The result of this thesis suggests that the Indonesian economy heavily relies on foreign savings, and also that the exchange rate would substantially be affected by the change in the amount of foreign savings. Specifically, in the absence of any government interventions, the overvalued exchange rate is predicted in the long run

Kata Kunci : Krisis ekonomi 1997,Computable general equilibrium,CGE,Foreign savings