1. bookVolume 9 (2020): Issue s1 (July 2020)
Journal Details
First Published
11 Mar 2014
Publication timeframe
3 times per year
access type Open Access

The Determinants of Indonesia’s Business Cycle

Published Online: 16 Jul 2020
Volume & Issue: Volume 9 (2020) - Issue s1 (July 2020)
Page range: 215 - 235
Journal Details
First Published
11 Mar 2014
Publication timeframe
3 times per year

This study investigates the determinants of Indonesian’s business cycle using the global vector autoregressive (GVAR) approach, by including spillover responses within 33 countries with 2000 bootstrap replications. The results show that Indonesia’s business cycle is influenced by both domestic and external factors. In addition to exogenous shocks from output, the dominant domestic factors are monetary policy and price competitiveness. The dominant external factors are global economic activity and liquidity conditions, particularly those originating from the Chinese economy. Spillovers from a number of economies appear to shape Indonesia’s economic fluctuations. The paper discusses such relevant spillovers.


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