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Abstract
Before the global pandemic hit the economy in 2020, Indonesia had experienced two contractions in 1963 and 1998. These contractions come with hyperinflation, while the recent contraction of 2020 has not. This paper attempts to analyse the C-19 pandemic 2020 effects on the economy, which generates contraction but has a low inflation rate. On the opposite, the Asian Financial Crises (AFC) of 1998 caused negative economic growth and
skyrocketing inflation. This paper applied descriptive data analysis and showed that the AFC affected the aggregate supply while the pandemic impacted the aggregate demand. This paper offers the usage of the proportion of inflation rate and economic growth rate and the annual sectoral growth rate comparison to describe Indonesia’s economic position and the pandemic effects.
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References
- Battaglini, M., & Coate, S. (2008). A dynamic theory of public spending, taxation, and debt. American Economic Review, 98(1), 201-36. doi: 10.1257/aer.98.1.201.
- Bordo, M., Eichengreen, B., Klingebiel, D., Martinez-Peria, M., & Rose, A. (2001). Is the crisis problem growing more severe? Economic Policy, 16(32), 53-82. Retrieved June 24, 2021, from http://www.jstor.org/stable/3601034.
- Bridges, B. (1998). Coping with contagion: Europe and the Asian economic crisis. CAPS Working Paper Series, 78. Retrieved June 24, 2021 from Lignan University website: http://commons.ln.edu.hk/capswp/35.
- Eggertsson, G. B., &Woodford, M. (2004). Policy options in a liquidity trap. American Economic Review, 94(2), 76-79. doi: 10.1257/0002828041301740.
- Gupta, S., & Jalles, J. T. (2021). Can COVID-19 induce governments to implement tax reforms in developing countries? (pp. 11-20, Rep.). Center for Global Development. Retrieved June 25, 2021, from http://www.jstor.org/stable/resrep29623.6.
- Halimatussadiah, A., Cesarina, A., Siregar, A. A., Hanum, C.,Wisana, D., Rahardi, F., ... & Sofiyandi, Y. (2020). Thinking ahead: Indonesia’s agenda on sustainable recovery from COVID-19 pandemic. Institute for Economic and Social Research Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI) and Ministry of National Development Planning/National Development Planning Agency (BAPPENAS). Retrieved June 25, 2021, from http://sdgs.bappenas.go.id/wp-content/uploads/2021/01/Thinking-Ahead-Indonesia%E2%80%99s-Agenda-on-Sustainable-Recovery-from-COVID-19-Pandemic.pdf.
- Ivan, W. (2011). Managing a liquidity trap: monetary and fiscal policy. NBER Working Paper 1734. National Bureau of Economic Research. doi: 10.3386/w17344.
- Korinek, A., & Simsek, A. (2016). Liquidity trap and excessive leverage. American Economic Review, 106(3), 699-738. doi: 10.1257/aer.20140289.
- Krugman, P. (2000). Thinking about the liquidity trap. Journal of the Japanese and International Economies, 14(4), 221-237. doi: https://doi.org/10.1006/jjie.2000.0458.
- McElroy, T. (2008). Exact formulas for the Hodrick-Prescott filter. The Econometrics Journal, 11(1), 209-217. doi: https://doi.org/10.1111/j.1368-423X.2008.00230.x.
- Mertens, K. R., & Ravn, M. O. (2014). Fiscal policy in an expectations driven liquidity trap. The Review of Economic Studies, 81(4), 1637-1667. doi: https://doi.org/10.1093/restud/rdu016.
- Omori, S. (2014). The politics of financial reform in Indonesia: The Asian financial crisis and its aftermath. Asian Survey, 54(5), 987-1008. doi: https://doi.org/10.1525/as.2014.54.5.987.
- Shipalana, P., O’Riordan, A., & Prinsloo, C. (2020). The macroeconomic impact of COVID-19 on Africa. COVID-19 Macroeconomic Policy Responses in Africa (CoMPRA), 03. South African Institute of International Affairs. Retrieved June 25, 2021, from https://media.africaportal.org/documents/Policy-Briefing-03-shipalana-oriordan-prinsloo.pdf.
- Summers, L. H. (2000). International financial crises: causes, prevention, and cures. American Economic Review, 90(2), 1-16. doi: 10.1257/aer.90.2.1.
- Tankel, S., Curtis, L., Fitt, J., & Goldberg, C. (2021). Positive visions, powerful partnerships: The keys to competing with China in a post-pandemic Indo-Pacific (pp. 21-24, Rep.). Center for a New American Security. Retrieved June 25, 2021, from http://www.jstor.org/stable/resrep30198.7.
- Verico, K. (2021). Global pandemic 2020: Indonesia’s output gap and middle-income trap scenario. LPEM-FEB UI Working Paper, 057. LPEM Faculty of Economics and Business, Universitas Indonesia. Retrieved June 25, 2021, from http://www.lpem.org/repec/lpe/papers/WP202157.pdf.
- Volckart, O. (1997). Early beginnings of the quantity theory of money and their context in Polish and Prussian monetary policies, c. 1520–1550. The Economic History Review, 50(3), 430-449. doi: https://doi.org/10.1111/1468-0289.00063.
References
Battaglini, M., & Coate, S. (2008). A dynamic theory of public spending, taxation, and debt. American Economic Review, 98(1), 201-36. doi: 10.1257/aer.98.1.201.
Bordo, M., Eichengreen, B., Klingebiel, D., Martinez-Peria, M., & Rose, A. (2001). Is the crisis problem growing more severe? Economic Policy, 16(32), 53-82. Retrieved June 24, 2021, from http://www.jstor.org/stable/3601034.
Bridges, B. (1998). Coping with contagion: Europe and the Asian economic crisis. CAPS Working Paper Series, 78. Retrieved June 24, 2021 from Lignan University website: http://commons.ln.edu.hk/capswp/35.
Eggertsson, G. B., &Woodford, M. (2004). Policy options in a liquidity trap. American Economic Review, 94(2), 76-79. doi: 10.1257/0002828041301740.
Gupta, S., & Jalles, J. T. (2021). Can COVID-19 induce governments to implement tax reforms in developing countries? (pp. 11-20, Rep.). Center for Global Development. Retrieved June 25, 2021, from http://www.jstor.org/stable/resrep29623.6.
Halimatussadiah, A., Cesarina, A., Siregar, A. A., Hanum, C.,Wisana, D., Rahardi, F., ... & Sofiyandi, Y. (2020). Thinking ahead: Indonesia’s agenda on sustainable recovery from COVID-19 pandemic. Institute for Economic and Social Research Faculty of Economics and Business, Universitas Indonesia (LPEM FEB UI) and Ministry of National Development Planning/National Development Planning Agency (BAPPENAS). Retrieved June 25, 2021, from http://sdgs.bappenas.go.id/wp-content/uploads/2021/01/Thinking-Ahead-Indonesia%E2%80%99s-Agenda-on-Sustainable-Recovery-from-COVID-19-Pandemic.pdf.
Ivan, W. (2011). Managing a liquidity trap: monetary and fiscal policy. NBER Working Paper 1734. National Bureau of Economic Research. doi: 10.3386/w17344.
Korinek, A., & Simsek, A. (2016). Liquidity trap and excessive leverage. American Economic Review, 106(3), 699-738. doi: 10.1257/aer.20140289.
Krugman, P. (2000). Thinking about the liquidity trap. Journal of the Japanese and International Economies, 14(4), 221-237. doi: https://doi.org/10.1006/jjie.2000.0458.
McElroy, T. (2008). Exact formulas for the Hodrick-Prescott filter. The Econometrics Journal, 11(1), 209-217. doi: https://doi.org/10.1111/j.1368-423X.2008.00230.x.
Mertens, K. R., & Ravn, M. O. (2014). Fiscal policy in an expectations driven liquidity trap. The Review of Economic Studies, 81(4), 1637-1667. doi: https://doi.org/10.1093/restud/rdu016.
Omori, S. (2014). The politics of financial reform in Indonesia: The Asian financial crisis and its aftermath. Asian Survey, 54(5), 987-1008. doi: https://doi.org/10.1525/as.2014.54.5.987.
Shipalana, P., O’Riordan, A., & Prinsloo, C. (2020). The macroeconomic impact of COVID-19 on Africa. COVID-19 Macroeconomic Policy Responses in Africa (CoMPRA), 03. South African Institute of International Affairs. Retrieved June 25, 2021, from https://media.africaportal.org/documents/Policy-Briefing-03-shipalana-oriordan-prinsloo.pdf.
Summers, L. H. (2000). International financial crises: causes, prevention, and cures. American Economic Review, 90(2), 1-16. doi: 10.1257/aer.90.2.1.
Tankel, S., Curtis, L., Fitt, J., & Goldberg, C. (2021). Positive visions, powerful partnerships: The keys to competing with China in a post-pandemic Indo-Pacific (pp. 21-24, Rep.). Center for a New American Security. Retrieved June 25, 2021, from http://www.jstor.org/stable/resrep30198.7.
Verico, K. (2021). Global pandemic 2020: Indonesia’s output gap and middle-income trap scenario. LPEM-FEB UI Working Paper, 057. LPEM Faculty of Economics and Business, Universitas Indonesia. Retrieved June 25, 2021, from http://www.lpem.org/repec/lpe/papers/WP202157.pdf.
Volckart, O. (1997). Early beginnings of the quantity theory of money and their context in Polish and Prussian monetary policies, c. 1520–1550. The Economic History Review, 50(3), 430-449. doi: https://doi.org/10.1111/1468-0289.00063.