Monetary and fiscal policies are effective instuments to boost aggregate demand and growth in the short-run. However, they are not effective as a remedy for declining growth potentials. Declining growth potentials are currently an imminent threat faced by many economies including Indonesia.
To avoid the threat and to boost potential growth in the medium and long-term Indonesia need a serious structural reforms and and accelerating infrastructure investments to increase productivity.
These are, among others, summary of one-year long study of Bank Indonesia supported by Asian Development Bank and under the technical assistance of a modeling team from Center for Economics and Development Studies (CEDS), Department of Economics, Faculty of Economics, Universitas Padjadjaran presented at the final seminar on March 23, 2016. In this study, the team assemble a series of simulation representing various infrastructure investment and structural reforms specific to different regions of Indonesia. The results are published in a book titled “Growth Diagnostics: Strategies to Support Structural Reform in Indonesia”.
In 2016, Bank Indonesia, under the same support of from CEDS-UNPAD and ADB will continue the study by incorporating other regions not covered in the last year’s study. As a kick-off, from May 30 to June 3, a workshop on CGE modeling will be carried out to equip Bank Indonesia’s staffs from different Indonesian regions with modeling skills to simulate different structural reforms simulation for their own regions.
CEDS team consists of experts in economic modeling lead by Dr. Arief Anshory Yusuf. The team are among others Mr. Irlan Adiatma Rum and Mr. Megananda Suryana. CEDS modeling team will supervise the study until the end of the year. CEDS will continue to support modeling and evidence-based policy reform implemented by Indonesian government particularly in different regions of Indonesia.