Agus Widarjono
Department Of Economics, Faculty Of Business And Economics, Universitas Islam Indonesia

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Journal : Journal of Indonesian Economy and Business

THE IMPACT OF REAL EXCHANGE RATE ON TRADE BALANCE Widarjono, Agus
Journal of Indonesian Economy and Business Vol 20, No 3 (2005): July
Publisher : Journal of Indonesian Economy and Business

Show Abstract | Download Original | Original Source | Check in Google Scholar

Abstract

The purpose of this study is to investigate the relationship between the trade balanceand the real exchange rate for bilateral trade in merchandise goods between Indonesia and the US, Japan and Singapore as its major trading partner. This article employs theelasticity approach to analyze such a relationship. Johansen multivariate cointegration isproposed to examine the impact of depreciation of real exchange rate on trade balance. Totests for J-curve, a generalize impulse response function generated from a vector error-correction model is applied.Quarterly data over the period 1988:1-2003:4 are used for the analysis. Our findingsdemonstrate that the real exchange rate has a positive impact on the bilateral tradebalance between Indonesia and Japan and Singapore. The generalized Marshall-Lernercondition, however, seems to hold only for the bilateral trade balance between Indonesiaand Japan. This study also finds that there is an evidence for J-curve for Indonesia’sbilateral trade balance with the Japan.Keyword: real exchange rate, trade balance, Marshal-Lerner Condition and J-curve
THE IMPACT OF REAL EXCHANGE RATE ON TRADE BALANCE Agus Widarjono
Journal of Indonesian Economy and Business (JIEB) Vol 20, No 3 (2005): July
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.22146/jieb.6578

Abstract

The purpose of this study is to investigate the relationship between the trade balanceand the real exchange rate for bilateral trade in merchandise goods between Indonesia and the US, Japan and Singapore as its major trading partner. This article employs theelasticity approach to analyze such a relationship. Johansen multivariate cointegration isproposed to examine the impact of depreciation of real exchange rate on trade balance. Totests for J-curve, a generalize impulse response function generated from a vector error-correction model is applied.Quarterly data over the period 1988:1-2003:4 are used for the analysis. Our findingsdemonstrate that the real exchange rate has a positive impact on the bilateral tradebalance between Indonesia and Japan and Singapore. The generalized Marshall-Lernercondition, however, seems to hold only for the bilateral trade balance between Indonesiaand Japan. This study also finds that there is an evidence for J-curve for Indonesia’sbilateral trade balance with the Japan.Keyword: real exchange rate, trade balance, Marshal-Lerner Condition and J-curve
HOUSEHOLD FOOD DEMAND IN INDONESIA: A TWO-STAGE BUDGETING APPROACH Agus Widarjono; Sarastri Mumpuni Rucbha
Journal of Indonesian Economy and Business (JIEB) Vol 31, No 2 (2016): May
Publisher : Faculty of Economics and Business, Universitas Gadjah Mada

Show Abstract | Download Original | Original Source | Check in Google Scholar | Full PDF (354.215 KB) | DOI: 10.22146/jieb.15287

Abstract

A two-stage budgeting approach was applied to analyze the food demand in urban areas separated by geographical areas and classified by income groups. The demographically augmented Quadratic Almost Ideal Demand System (QUAIDS) was employed to estimate the demand elasticity. Data from the National Social and Economic Survey of Households (SUSENAS) in 2011 were used. The demand system is a censored model because the data contains zero expenditures and is estimated by employing the consistent two-step estimation procedure to solve biased estimation. The results show that price and income elasticities become less elastic from poor households to rich households. Demand by urban households in Java is more responsive to price but less responsive to income than urban households outside of Java. Simulation policies indicate that an increase in food prices would have more adverse impacts than a decrease in income levels. Poor families would suffer more than rich families from rising food prices and/or decreasing incomes. More importantly, urban households on Java are more vulnerable to an economic crisis, and would respond by reducing their food consumption. Economic policies to stabilize food prices are better than income policies, such as the cash transfer, to maintain the well-being of the population in Indonesia Keywords: Urban, Two-Stage Budgeting, QUAIDS, Price and Income elasticity