TY - JOUR
T1 - The dynamics of Indonesia's current account deficit
T2 - Analysis of the impact of exchange rate volatility
AU - Purwono, Rudi
AU - Mucha, Karima
AU - Mubin, M. Khoerul
N1 - Publisher Copyright:
© KODISA.
PY - 2018/5/1
Y1 - 2018/5/1
N2 - In the globalization and free trade era, the current account deficit problem is a common phenomenon experienced by most countries, both developing and developed countries. Also with managed floating regime of exchange rate, it becomes very important to analyze the dynamics of current account balance which determine the trade. The deficit condition has lasted for four years in Indonesia, as well the deficit value above the value of the surplus that has been experienced during the period 2005-2011. This study is firstly aim to examine the condition of the deficit which happens in the export and import, manufactured goods and oil and gas, whether related to the transaction of goods and services. We try to build a predicted model which near the actual. Then, the focuses examines an exchange rate volatility impact on current account deficit. The model used in this research is a simultaneous model of Indonesia current account deficit from 2005 to 2014. The simulation result indicated that depreciation increase surplus to current account deficit. The decrease of export manufactured goods (non oil and gas) higher than the increase of import. For the oil and gas sector, depreciation of the rupiah against the US dollar results in an increased burden of higher oil and gas imports due to import transactions.
AB - In the globalization and free trade era, the current account deficit problem is a common phenomenon experienced by most countries, both developing and developed countries. Also with managed floating regime of exchange rate, it becomes very important to analyze the dynamics of current account balance which determine the trade. The deficit condition has lasted for four years in Indonesia, as well the deficit value above the value of the surplus that has been experienced during the period 2005-2011. This study is firstly aim to examine the condition of the deficit which happens in the export and import, manufactured goods and oil and gas, whether related to the transaction of goods and services. We try to build a predicted model which near the actual. Then, the focuses examines an exchange rate volatility impact on current account deficit. The model used in this research is a simultaneous model of Indonesia current account deficit from 2005 to 2014. The simulation result indicated that depreciation increase surplus to current account deficit. The decrease of export manufactured goods (non oil and gas) higher than the increase of import. For the oil and gas sector, depreciation of the rupiah against the US dollar results in an increased burden of higher oil and gas imports due to import transactions.
KW - Balance of payment
KW - Current account deficit
KW - Exchange rate
KW - Exchange rate volatility
KW - Indonesia
KW - Simultaneous model
UR - http://www.scopus.com/inward/record.url?scp=85053385603&partnerID=8YFLogxK
U2 - 10.13106/jafeb.2018.vol5.no2.25
DO - 10.13106/jafeb.2018.vol5.no2.25
M3 - Article
AN - SCOPUS:85053385603
SN - 2288-4637
VL - 5
SP - 25
EP - 33
JO - Journal of Asian Finance, Economics and Business
JF - Journal of Asian Finance, Economics and Business
IS - 2
ER -