Download - Macroeconomics of Indonesia
The Nature of Economics : Macroeconomics of Indonesia
Marsya Paramita C. (335916)
Prabaning Tyas (335925)
Cornelia Ayu Purwandari (330778)
M. Ibnu Thorikul Aziz (331818)
Iman Handi Pratama (330589)
I Wayan Arya Swarnata (330694)
What is economics ? – Why do we study it ?
Resources are scarce Needs and Wants and limitless People need to allocate their scare resource Economics = study of how people allocate their resources
Economic Models
As a scientist, economist use models to explain economic Models usually consisted of diagram and equation Models are not precisely same as the real world
Positive and Normative Analysis
Positive analysis : describe the world as it is Positive analysis will be in the theories part of
presentation Normative : prescribe the world how it should be Normative analysis will be in the discussion part of
presentation
Microeconomics and Macroeconomics
Micro : Individual analysis & behavior
Macro : Aggregat analysis & behavior
The Development of Macroeconomics Theory
The Great Depression (1929-1933) was happened throughout Europe and North America.
There was no macro-micro dichotomy in economics.
The Development of Macroeconomics Theory
John Maynard Keynes wrote a book titled “The
General Theory of Employment, Interest,
and Money” which is published in 1936.
Critics
Classical Economics: Only Aggregate Supply (AS) that influences the national income.
Keynes: Aggregate Demand (AD) is also responsible for the low income and the high rate of unemployment.
Critics
Classical Economics: Believe totally in market mechanism without any intervention.
Keynes: The government can intervene to stimulate the Aggregate Demand (AD) to lift the country out of recession.
Changes
Those Keynes’ thoughts brought some radical
changes in economics:
1. The global aspects and the aggregates aspect of economics were seen as more important.
2. The government’s roles were seen to be more needed.
Macroeconomics Theories and Issues consists of :
1. Inflation
2. Unemployment
3. Economic Growth
http://www.economicshelp.org
What is inflation?
Inflation is a rise in the general level of prices
of goods and services in an economy over a period of time
http://www.economicshelp.org
Types of Inflation by David A. Mayer
There are two primary types of inflation by its causes :
Demand-pull inflation Save than to spendThe public or foreign
sector reinforces itSpread across borders
as wellBecome hyperinflation
Cost-push Inflation
Price of inputs increases Stagflation Decreases in GDP wage-price spiral
http://www.economicshelp.org
What is unemployment ?
Unemployment is defined as a situation where someone of working age is not able to get a job but would like to be in full time employment
http://www.economicshelp.org
Types of Unemployment Demand Deficient Unemployment Structural Unemployment Real Wage Unemployment Frictional unemployment Voluntary Unemployment Seasonal Unemployment Disguised / Hidden unemployment Natural Rate of Unemployment Under Employment
Unemployment Rate in Indonesia decreased to 6.14 percent in August of 2012 from 6.32 percent in February of 2012.
Historically, from 1982 until 2012, Indonesia Unemployment Rate averaged 6.18 Percent reaching an all time high of 11.24 Percent in August of 2005 and a record low of 2 Percent in December of 1983.
In Indonesia, the unemployment rate measures the number of people actively looking for a job as a percentage of the labour force.
This page includes a chart with historical data for Indonesia Unemployment Rate.
Unemployment Issue
Philippines tops neighboring countries in unemployment , posted by bworldonline.com
The total number of unemployed persons in the country reached 2.9 million in January 2012 or 7.2% of the 40.3 million Filipinos in the labor force
economic growth in the Philippines is much slower compared with the other six countries
The Philippine economy grew 3.9% last year, weaker than the GDP growth rates of Indonesia (6.5%), Malaysia (5.1%), Singapore (4.8%), China (9.2%) and South Korea (6.1%), except Thailand which expanded by only 0.1% due to floods that dragged down its economy
Indonesia reported a 6.6% unemployment rate. The other five Asian countries reported fairly low unemployment rates: Malaysia, 3.1%; Singapore, 2.0%; Thailand, 0.4%; China, 4.1%; and South Korea, 3.7%.
This suggests that joblessness is more severe [in the Philippines] than other countries in Asia
Economic Growth
Economic growth is best defined as a long-term expansion of the productive potential of the economy
Trend growth is the long term non-inflationary increase in output (GDP) caused by an increase in productive capacity
refers to the smooth path of long run national output
Growth occurs because of an increase in the quantity and/or quality of factor resources.
Innovation is a major determinant of growth
Growth rates for OECD countries 1990-2006 Average annual growth Average annual
growth rate from 1990-2006 (%) rate from 1990-
2006 (%)Ireland 6.7 Mexico 3.0Korea 5.4 United Kingdom 2.7Slovak Republic 4.7 Finland 2.7Poland 4.5 Total OECD 2.7Turkey 4.3 Sweden 2.4Luxembourg 4.2 Denmark 2.3Hungary 3.8 Netherlands 2.2Australia 3.6 Austria 2.2Iceland 3.4 Belgium 2.0New Zealand 3.3 Portugal 1.9United States 3.3 France 1.9Canada 3.2 Euro area 1.9Norway 3.1 Germany 1.4Czech Republic 3.1 Japan 1.3Greece 3.0 Italy 1.3Spain 3.0
Source: OECD World Economic Outlook June 2006, data for 2006 is a forecast
Economic Growth Issue of Indonesia
Posted by Jakarta Globe.com
Europe Problems Hit Indonesia’s Economic Growth Forecast
President Susilo Bambang Yudhoyono aired optimism that the 6.7 percent target would be met this year
Bank Indonesia cut its 2012 economic growth forecast to 6.3 percent from its original forecast of 6.7 percent.
What is national income ?
Total value of country’s final output of all new goods and services produced in certain period
Measure of a nation’s economic productivity
NATIONAL INCOME
Gross Domestic Product (GDP)
GDP = Consumption + Investment + Government Spending + Net Export
GDP = Wages + Interest + Rent +Profit
The Accounts of National Income
Gross National Product (GNP)
Net National Product (NNP)
National Income (NI)
Personal Income (PI)
Disposable Income (DI)
The Accounts of National Income(Coun’t)
Rank
Country 2011 2010 2009 2008
1 United States 15075.68 14498.93 13973.65 14291.55
2 China 7298.15 5930.39 4990.53 4519.95
3 Japan 5866.54 5488.55 5035.14 4849.19
4 Germany 3607.36 3312.19 3307.2 3640.73
5 France 2778.09 2570.59 2626.54 2845.12
6 Brazil 2492.91 2142.93 1622.31 1650.39
7United Kingdom 2431.31 2267.48 2193.18 2670.4
8 Italy 2198.73 2060.89 2116.63 2318.16
9 Russia 1850.4 1487.29 1222.69 1660.85
10 India 1826.81 1630.47 1266.25 1262.52
16 Indonesia 846.45 708.37 538.76 510.31
GDP across Countries(Billion US$) Source : World Bank, available at www.knoema.com
OVERVIEW
GDP growth for 2012 is 6.3% (Asian Development Bank) The country still faces serious challenges of improving its
infrastructure and regulatory environment investment should contribute to strengthening and
deepening the country's industrial structure The new administration of the President YUDHOYONO,
introduced new reforms which will contribute to a less corrupted economy decrease unemployment and infrastructure development.
Gross Domestic Product is the value produced within a country’s borders, whereas the Gross national Income is the value produced by all the citizens.
GDP is said to be the measure of a country’s overall economic output. The GNI is the total value that is produced within a country, which comprises of the Gross Domestic Product along with the income obtained from other countries (dividends, interests).
Gross Domestic Product helps to show the strength of a country’s local income. On the other hand, Gross National Income helps to show the economic strength of the citizens of a country.
GNI is based on ownership, and GDP is based on location.
SO WHAT’S DIFFERENCES BETWEEN GDP AND GNP?
REAL CASE : INDONESIA’s GDP and GNP from 2008 to February 2013
INDONESIA’S GDP GROWTH SLOWS IN THE FOURTH QUARTER OF 2012