Fiscal Policy, Productivity Shocks, and the U.S. Trade Balance Deficit

An alternative strategy to reduce the trade balance deficit simultaneously to increase the net foreign exchange is the import-substitution for raw materials used to produce an export goods. This paper proposes an import substitution study on footwear products that have a dependency on imported raw materials by 70 percent, with the largest composition being leather raw materials by 67 percent. This paper analyzes the relationship between subsidies on the leather industry to leather import-substitution, multiplier effect to footwear sector, and Indonesia trade balance. Author make use of simulation the on Input-Output 2010 table and Computable General Equilibrium (CGE) Model. The simulation shows 100 billion subsidies on the leather sector, lead for the substitution-import of leather by 7,94 million rupiah, increase the net export foreign exchange by 1.1 billion rupiah of the footwear sector, and for overall, increase Indonesia trade balance deficit by 68 billion rupiah. Keywords: Computable General Equilibrium, footwear, leather, net foreign exchange, subsidy.ABSTRAK: Salah satu terobosan untuk mengurangi defisit neraca perdagangan dan meningkatkan nilai neto devisa ekspor adalah dengan substitusi impor bahan baku yang digunakan untuk memproduksi barang ekspor. Paper ini mengusulkan kajian substitusi impor pada produk alas kaki yang mempunyai ketergantungan bahan baku impornya sebesar 70 persen, dengan komposisi terbesar adalah bahan baku kulit sebesar 67 persen. Tujuan penelitian ini adalah untuk mengetahui dampak stimulus subsidi pada industri kulit terhadap subtitusi impor kulit, dukungan multiplier sektor kulit terhadap sektor alas kaki, serta terhadap devisa ekspor Indonesia. Penelitian ini menggunakan simulasi model Computable General Equilibrium (CGE). Hasil simulasi menunjukkan stimulus subsidi sebesar 100 milyar rupiah pada sektor kulit memberikan substitusi bahan baku kulit sebesar 7,94 juta rupiah, menaikkan devisa ekspor sektor alas kaki sebesar 1.1 miliar rupiah, serta secara keseluruhan menambah defisit neraca berjalan Indonesia sebesar 68 miliar rupiah. Kata kunci: alas kaki, Computable General Equilibrium (CGE), devisa ekspor, kulit, subsidi.

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An Essay on the Fed and the U.S. Treasury: Lender of Last Resort and Fiscal Policy

SSRN Electronic Journal ◽

10.2139/ssrn.3607192 ◽

2020 ◽

Author(s):

Hal S. Scott

Keyword(s):

Fiscal Policy ◽

Lender Of Last Resort ◽

The U.S

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Fiscal Policy and Aggregate Demand in the U.S. Before, During and Following the Great Recession

Finance and Economics Discussion Series ◽

10.17016/feds.2017.061 ◽

2017 ◽

Vol 2017 (061) ◽

Cited By ~ 2

Author(s):

David Cashin ◽

◽

Jamie Lenney ◽

Byron Lutz ◽

William Peterman ◽

...

Keyword(s):

Fiscal Policy ◽

Great Recession ◽

Aggregate Demand ◽

The Great Recession ◽

The U.S

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The Undervaluation of the Yuan Dispute: Is a Repetition of Germany's Experience in 1969 Necessary, Inevitable or Desirable? A Comment and Reply to John A. Tatom

Global Economy Journal ◽

10.2202/1524-5861.1334 ◽

2008 ◽

Vol 8 (2) ◽

pp. 1850134 ◽

Cited By ~ 2

Author(s):

Christian M. Oberpriller ◽

Beate Sauer ◽

Friedrich L. Sell

Keyword(s):

Trade Balance ◽

Chinese Economy ◽

Asian Countries ◽

Economic Relations ◽

The Us ◽

Financial Market Stability ◽

Balance Deficits ◽

Partial Description ◽

The Right ◽

Balance Deficit

The present article is a reply to the article by John A. Tatom titled "The US-China Currency Dispute: Is a Rise in the Yuan Necessary, Inevitable or Desirable?," recently published in this journal. We found that John Tatom seems to only give a partial description of the US-Chinese economic relations, of the main features of the Chinese economy, and also of the macroeconomic policy options available to China. We argue that the real exchange rate is not the appropriate measure for a currency undervaluation, but it is the continuous, one-directional and accelerating accumulation of foreign exchange reserves. We also argue that the likely improvement in the US trade balance deficit caused by an appreciating Yuan will not be offset by growing US trade balance deficits with other East Asian countries. Furthermore, giving up the actual currency peg will benefit rather than harm China, provided that the steps towards Yuan flexibility will be taken in the right sequence and order. We hold that a revaluation of the Yuan is necessary, inevitable and desirable just as much as it happened to be with the Deutschmark in 1969. It would not "damage Chinese development." China needs a Yuan appreciation mainly in its own interest to assure domestic financial market stability, and to avoid an overheating of its economy and a soaring inflation.

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