The Impact of Fiscal-Monetary Policy Interaction on the Indonesian Economy

Chairani Fadhila Pravitasari, Insukindro Insukindro


This study seeks to examine the interactions between fiscal and monetary policies and their impact on output and inflation in Indonesia from 2003:4 to 2018:4 using Structural Vector Autoregression (SVAR). It is important to investigate the coordination between both because overall macroeconomic policy framework requires a close coordination between monetary and financial policies. The variables utilized are government spending, debt, output gap, tax, inflation, interest rate, and exchange rate obtained from the Indonesian Ministry of Finance, the Indonesian Statistics, and Bank of Indonesia. Government spending as a proxy for fiscal policy and interest rate as a proxy for monetary policy have a strategic complement relationship, whereas tax revenue as a proxy for fiscal policy and interest rate as a proxy for monetary policy have a strategic substitutes relationship.


Monetary, Fiscal, SVAR, Output, Inflation

Full Text:



Abdel-Haleim, S. M. (2016). Coordination of Monetary and Fiscal Policies: The Case of Egypt. International Review of Research in Emerging Markets and The Global Economy (IRREM), 2(4), 933-954.

Adiningsih, S. (2012). Koordinasi dan Interaksi Kebijakan Fiskal-Moneter: Tantangan ke Depan. Kanisius: Yogyakarta.

Andaiyani, S., Hidayat, A., Muthia, F., Widharosa, N., & Mardalena, M. (2020). Trilemma to Quadrilemma: An empirical study from Indonesia. Jurnal Ekonomi Pembangunan, 18(2), 119-128. doi:

Arintoko, & Insukindro. (2017). Effect of Exchange Rate, Foreign Direct Investment and Portfolio Investment on the Indonesian Economy: A Structural Cointegrating Vector Autoregression Approach. International Journal of Economics and Financial Issues, 7(2), 682–691.

Arora, S. (2018). Monetary Versus Fiscal Policy in India: An SVAR Analysis. Macroeconomics and Finance in Emerging Market Economies, 11(3), 250–274.

Bonam, D., & Lukkezen, J. (2019). Fiscal and Monetary Policy Coordination, Macroeconomic Stability, and Sovereign Risk Premia. Journal of Money, Credit and Banking, 51(2–3), 581–616.

Büyükba?aran, T., Çebi, C., & Y?lmaz, E. (2020). Interaction of monetary and fiscal policies in Turkey. Central Bank Review, 20(4), 193–203.

Cazacu, A. M. (2015). Fiscal-monetary policy interaction. SVAR evidence from a CEE country. European Scientific Journal, ESJ, 11(10), 12-23.

Demid, E. (2018). Fiscal and Monetary Policy: Coordination or Conflict? International Economic Journal, 32(4), 547–571.

Franta, M., Libich, J., & Stehlík, P. (2018). Tracking Monetary-Fiscal Interactions Across Time and Space. International Journal of Central Banking, 14(3), 167-227.

Gujarati, R. (2015). Microeconomic and Macroeconomic: Issues and Effects on Economic Growth. International Journal of Recent Scientific Research, 6(7), 5310–5317.

Haug, A. A., J?drzejowicz, T., & Sznajderska, A. (2013). Combining monetary and fiscal policy in a SVAR for a small open economy. NBP Working Paper No. 168, 1-44.

Hubbard, R. G., Patrick O’brien, A., & Rafferty, M. (2012). Macroeconomics. Pearson Education.

Jawadi, F., Mallick, S. K., & Sousa, R. M. (2016). Fiscal and monetary policies in the BRICS: A Panel VAR approach. Economic Modelling, 58, 535–542.

Juhro, S. M., Narayan, P. K., & Iyke, B. N. (2022). Understanding monetary and fiscal policy rule interactions in Indonesia. Applied Economics, 54(45), 5190-5208.

Kappel, S., & Jank?, J. (2014). Integration of monetary and fiscal policy of the countries of the Visegrad group. Review of Economic Perspectives, 14(3), 197–213.

Kuncoro, H., & Sebayang, K. D. A. (2013). The Dynamic Interaction Between Monetary and Fiscal Policies in Indonesia. Romanian Journal of Fiscal Policy (RJFP), 4(1), 47–66.

Scharpf, F. W. (2019). Games Real Actors Play Actor-centered Institutionalism in Policy Research. Routledge.

Sen, H., & Kaya, A. (2015). The relative effectiveness of Monetary and Fiscal Policies on growth: what does long-run SVAR model tell us?. MPRA Paper No. 65903, July, 1-21.

Tan, C.-T., Mohamed, A., Habibullah, M. S., & Chin, L. (2020). The Impacts of Monetary and Fiscal Policies on Economic Growth in Malaysia, Singapore, and Thailand. South Asian Journal of Macroeconomics and Public Finance, 9(1), 114–130.

Wang, Y., Wang, X., Zhang, Z., Cui, Z., & Zhang, Y. (2023). Role of fiscal and monetary policies for economic recovery in China. Economic Analysis and Policy, 77, 51–63.

Wijoyo, S. (2012). Interaksi Kebijakan Moneter dan Fiskal. BI Working Paper.

Yanushevsky, R., & Yanushevsky, C. (2018). Applied Macroeconomics for Public Policy. Academic Press.

Yunanto, M., & Medyawati, H. (2013). Macroeconomic Structural Change in Indonesia: in The Period of 1990 to 2011. International Journal of Trade, Economics and Finance, 4(3), 98–103.



  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

Jurnal Ekonomi Pembangunan
Jalan Raya Palembang-Prabumulih Km. 32
Jurusan Ekonomi Pembangunan, Fakultas Ekonomi Universitas Sriwijaya
Indralaya, Sumatera Selatan, Indonesia
Email:, Tel/Fax : (0711)580231

p-ISSN: 1829-5843, e-ISSN 2685-0788

Creative Commons License

Jurnal Ekonomi Pembangunan by 

is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.  

Jurnal Ekonomi Pembangunan is Indexed by:

Logo Google Scholar Unsri  Moraref One Search