Abstract
Ricardian fiscal regime is a paradigm where the government are "well behaved" dan rational in managing debt. This paradigm can be used to assess fiscal sustainability which is reflected through the positive effect between government debt and the primary balance ratio. Problems arise when government’s debt continues to increase but the primary balance ratio is in a negative position.This study aims to see whether the paradigm of the Ricardian fiscal regime occurs in Indonesia, which is reflected by the effect of government debt and some macroeconomic variables as explanatory variables, such as economic growth, government spending, 3-month SPN interest rates, inflation and Indonesian crude oil prices to the primary balance ratio to GDP in Indonesia in the period of 2010.Q1-2018.Q4. This research used Error Correction Model (ECM) as the method.The result shows that Ricardian fiscal regime occurs in Indonesia, reflected through government debt which has a positive and significant effect on the primary balance ratio in the long run, but does not have a significant effect in the short term. In addition, economic growth, government spending, 3-month SPN interest rates and inflation have a significant effect on the primary balance ratio in the long term.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.