Analysis of Fiscal and Monetary Policy Effectiveness with the IS-LM Approach: Case Studies in 2001-2005

Abstract

The economic crisis gave a lesson to the nation of Indonesia that some macro economic indicators are not yet a satisfactory assurance that Indonesia's strong economic conditions. As the economy is felt too slow than it should be so with fiscal and monetary policy proper is expected to stimulate the economy grow faster. results of research in Indonesia during the period 2001 to 2005 shows monetary policy is more effective than fiscal policy in influencing the increase in National Income. While interest rates continue to be maintained constantly at one digit.

Keywords: IS, LM, Fiscal, Monetary

JEL Classification: A11, B41, E62, E63