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Social and Behavioral Sciences
Economics and Finance in Indonesia
Capital flows; sudden stops; GDP growth; monetary policy; fiscal policy
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Enhancing Resilience To Turbulent Global Financial Markets: An Indonesian Experience, Febrio Kacaribu
Enhancing Resilience To Turbulent Global Financial Markets: An Indonesian Experience, Febrio Kacaribu
Economics and Finance in Indonesia
In the empirical literature, large and abrupt declines in capital inflows, or sudden stops, typically hit asset markets and generate output losses in the receiving countries. The significant decrease in capital flows to emerging markets in 2018 is a unique opportunity to test this premise. Using Indonesian data, we found that the sharp decline in capital inflows for over two consecutive quarters in 2018 had an adverse impact on the currency, equities, and bond markets, but no discernible output loss was recorded. Real GDP growth remained resilient throughout 2018 and held broadly steady at around 5 percent in the first …