Impact of the COVID-19 Pandemic on the Economic Performance in Indonesia: Simultaneous Equations Approach

Abstract

This study explains the relationship between economic performance and tax revenues in Indonesia and the impact of COVID-19 on Indonesia's economic performance using a new approach, namely the three-stage least squares model. This approach is used based on the alleged simultaneous relationship that occurs between economic performance variables and tax revenue variables. The results of the analysis prove that the variables of economic performance and tax revenue have a simultaneous relationship, so that the two variables influence one another. Additionally, the results of the analysis show that the COVID-19 pandemic has had a negative effect on economic performance in Indonesia. Therefore, the implementation of economic protection policies for vulnerable groups in society, namely the poor and near-poor, needs to be carried out properly. The novelty of the results is the use of the three-stage least-squares model to determine the relationship between economic performance variables and tax revenues simultaneously. Keywords: COVID-19, economic performance, Indonesia, simultaneous equations, three-stage least squares. DOI: https://doi.org/10.55463/hkjss.issn.1021-3619.60.47