"Fiscal Policy Before and After The 1997 Crisis : Case of Indonesia"

Penulis: Ni Made Rooskareni

This study examines the pursuant of fiscal policy by the government of Indonesia covering the period of 1984-2001, there by incorporating the periods before and after the 1997 crisis. The evidence shows that the government of Indonesia in most of the years covered in the study has run surpluses both measured by the current account, and the primary balance. In addition, the government of Indonesia ran surpluses in the overall balance since in 1990 and in 1997 it started to run deficit and the deficits have been widened. Thus, by any one of these measures, before the crisis Indonesia conducted conservative and prudent fiscal management. In addition, the tight fiscal policy might somewhat cool down the economy. Running deficits when the economy is in recession is inevitable and justifiable mostly due to the stabilization mechanism is at work and the non-discretionary part of the fiscal policy.

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