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GTAP Resource #5435

"The Impact of New Trade Agenda to Macroeconomic Performance of Indonesia and Japan in Short and Long Term"
by Widyasanti, Amalia

Deterioration of private demand -- as a result of economic crisis and increase of unemployment – has been the main reason of worsening global trade. This condition has, of course, affected economic performance of countries through trade channels. Furthermore, the recent trade agenda following to Trump administration has created another uncertainty to the world economy. This paper studies the impact of new trade agenda, which is represented by Trump’s plan on trade policy, to the world economy as well as to Indonesian and Japanese economy in particular. The analysis is based on computable general equilibrium of GTAP model version 6, with two scenarios: (i) Trump Trade Agenda when implementing 45 and 35 percent tariff to China and Mexico; (ii) Trade Hit List when imposing tariff to the 16 countries in the trade hit list. Impacts of both scenarios are examined in short run and long run. The results suggest that both scenarios in the short run will not create any significant effect to global economy as whole nor to Indonesian and Japan in particular. However, their impacts to the global economy, Indonesia, and Japan will be substantial in the long run. Therefore, Indonesia and Japan in particular should concern on providing sound economic policies to reduce the risk of new trade agenda to these economies in the long run. Some policy recommendation provided in this paper are: (i) Japan should focus on improving technological innovation to realize the implementation of society 5.0 and industry 4.0 as scheduled; (ii) Indonesia should facilitate more investment to its economy and provide more government investment to induce accumulation of capital stock in the future. Furthermore, efficiencies and technological adoption should also be main concern of the Indonesian government to induce productivity of the economy and help mitigate the global risks in the long run.

Resource Details (Export Citation) GTAP Keywords
Category: GTAP Application
Status: Published
By/In: Bulletin of Monetary Economics and Banking - Bank of Indonesia
Date: 2017
Version: 1
Created: Widyasanti, A. (1/8/2018)
Updated: Batta, G. (1/9/2018)
Visits: 910
- Baseline development
- Calibration and parameter estimation
- Economic growth
- Foreign direct investment
- Domestic policy analysis
- Asia (East)

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