Airlangga International Journal of Islamic Economics and Finance
Vol. 1 No. 2 (2018): July-December 2018

THE EFFECT OF MACROECONOMIC VARIABLES ON FISCAL SUSTAINABILITY IN INDONESIA, PERIOD 2004Q1-2018Q4

Muhammad Latif Abdullah (Sunan Kalijaga Yogyakarta State Islamic University)
FNU Sunaryati (Sunan Kalijaga Yogyakarta State Islamic University)



Article Info

Publish Date
21 Jul 2020

Abstract

Abstract Fiscal sustainability illustrates the condition of a healthy government budget which can finance government spending without increasing debt supply. The purpose of this study is to analyze the impact of macroeconomic variables on fiscal sustainability which in this study fiscal sustainability is proxied as a government budget deficit. The data used in this study is the 2004Q1-2018Q4 time series data using the Vector Error Correction Model (VECM). The results showed that fiscal conditions in Indonesia are sustainable and macroeconomic variables such as domestic debt andinflation has a positive effect on increasing the government budget deficit. Whereas the variable state revenues and foreign debt negatively affect the government budget deficit.Keywords : Fiscal Sustainability, Government Budget Deficit, Domestic Debt, Foreign Debt.

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Journal Info

Abbrev

AIJIEF

Publisher

Subject

Economics, Econometrics & Finance

Description

Airlangga International Journal of Islamic Economic and finance (AIJIEF) publishes quality and in-depth analysis of current issues within Islamic finance and Islamic economics. The journal welcomes robust evidence-based empirical studies and results-focused case studies that share research in ...