Determinants of the current account balance in Indonesia

Kurniadi, Anggi Putri; Aimon, Hasdi

doi:10.29210/2018125

Cited by 5 publications

(3 citation statements)

References 23 publications

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“…The condition of the current account balance often fluctuates due to imbalances in exports and imports [4]- [6]. International trade can result in a country more likely to export which results in a surplus or more tend to import resulting in a deficit.…”

Section: Rd Ircebmentioning

confidence: 99%

Determinants and Causality of Current Account Balance and Foreign Direct Investment: Lower Middle Income Countries in ASEAN

Aimon

Kurniadi

Sentosa

2020

KSS

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This study investigates the determinants and causality between current account balance and foreign direct investment in Association of Southeast Asian Nations (ASEAN) in lower middle income countries. This study uses time series from 2000-2017 and cross section of 6 countries, namely Indonesia, Philippines, Vietnam, Lao, Myanmar and Cambodia, which were analyzed using simultaneous equation model approach. There are three important findings in this study. First, current account balance is positively affected by financial development, government expenditure, real GDP and real exchange rate, while negatively affected by foreign direct investment. Second, foreign direct investment is positively affected by real GDP, real exchange rate, economic openness and current account balance, while negatively affected by inflation. Third, there is a causal relationship between current account balance and foreign direct investment, which the two variables significantly influence each other. Therefore, it is highly recommended for lower middle income countries in ASEAN to intervene in macroeconomic policy variables, so that the deficit conditions for current account balance and foreign direct investment can be reduced in the lower middle income countries in ASEAN. Keywords: current account balance, foreign direct investment, determinants, causality, lower middle income countries, ASEAN.

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Section: Rd Ircebmentioning

confidence: 99%

Determinants and Causality of Current Account Balance and Foreign Direct Investment: Lower Middle Income Countries in ASEAN

Aimon

Kurniadi

Sentosa

2020

KSS

Self Cite

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“…Kovacevic (2017) observed that exchange rate, inflows of foreign direct investment, and foreign remittances are creating imbalances in this account in 9 SEE countries. For Malaysia, these reasons were discovered to be the growth in real GDP and the value of money (Kurniadi and Aimon, 2018). Riaz, Javid, and Mubarik (2019) investigated this issue for South Asian Economies and concluded that domestic income and foreign assets play a crucial role in this regard.…”

Section: Graph 1: Cad As % Of Gdpmentioning

confidence: 99%

Empirical Analysis of the Factors affecting Current Account Deficit in Pakistan

Minhajuddin

Bakhsheesh

Khan

2020

GER

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The maintenance of a balanced current account is among the enormous challenges faced by most of the developing economies. This study seeks to examine the determinative factors of the current account deficit in Pakistan over the period of 1976-2020.Assessment of these factors has been made within the stipulated structure of the ARDL model.Findings reveal that fiscal sustainability, sustainable economic growth, controlled inflation,and growth in gross saving are the reasons that help in stimulating the current account balances in the long run. This study also finds that exchange rate, money supply, and TOT were unable to change the position of the current account. Based on the empirical findings, it is recommended that government should concentrate on recognitions of channels that help in boosting the government revenue, accelerating the growth process, stimulating the gross saving, and maintaining a moderate level of inflation.

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“…Apart from the monetary policies carried out by each country, fluctuating current account conditions are also inseparable from shocks to macroeconomic variables [10].…”

Section: Introductionmentioning

confidence: 99%

The Impact of Monetary Policy and Macroeconomic Indicators on the Current Account in Developing ASEAN

Andini,

Zahara,

Suci

2024

KSS

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The current account balance is a component of the balance of payments, in which a surplus or deficit is a form of a country’s external balance or imbalance. Since the 2008 financial crisis and the COVID-19 pandemic, several countries, especially developing countries, have experienced external imbalances, which is related to a continuous pattern of transactions with the rest of the world. Developing countries in the ASEAN region are often vulnerable to experiencing external imbalances which are reflected in their current account balance, which every year the country continues to fluctuate and tends to decrease until it experiences a current account deficit. This research was conducted to analyze the impact of monetary policy and macroeconomic indicators on the current account situation of developing countries in the ASEAN region during the 15 year period of 2007–2021. The Current Account Balance as the dependent variable and the independent variable uses Interest Rates in explaining monetary policy and macroeconomic variables including Exchange Rate, Inflation, Gross Domestic Product, Foreign Direct Investment, and Trade Openness. This study analyzes long-term and short-term effects using the VECM panel model. The results show that Interest Rates in the short term has no effect, but in the longer term has a significant negative effect. The Exchange Rate in the short term and long term have a significant positive effect. Inflation and GDP have no effect in the short term but have a significant negative effect in the long term. FDI has a significant positive effect in the short term and the long term. And finally, Trade Openness in the short term has a significant positive and in the long term has a significant negative effect. Keywords: current account balance, interest rate, macroeconomic, VECM panel

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Determinants of the current account balance in Indonesia

Cited by 5 publications

References 23 publications

Determinants and Causality of Current Account Balance and Foreign Direct Investment: Lower Middle Income Countries in ASEAN

Determinants and Causality of Current Account Balance and Foreign Direct Investment: Lower Middle Income Countries in ASEAN

Empirical Analysis of the Factors affecting Current Account Deficit in Pakistan

The Impact of Monetary Policy and Macroeconomic Indicators on the Current Account in Developing ASEAN

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