KEBIJAKAN FISKAL, MONETER INFLASI DAN LAPANGAN KERJA

HUBUNGAN ANTAR VARIABEL PHILIP CURVE (1958) PENDAPATAN PEKERJA – INFLASI KEYNES (1936) GOVERNMENT INTERVENTION TO UNEMPLOYMENT RATE

PHILIP CURVE (1958) Market determine labor wages unemployment was high, wages increased slowly; unemployment was low, wages rose rapidly Trade-off: unemployment falls, workers push for higher wages. Firms pass these higher wage costs on to consumers  higher prices and an inflation

KEYNES (1936) INFLASI – RESESI  APBN PENDAPATAN : HUTANG PENGELUARAN : PROGRAM STIMULUS EKONOMI  KETERSEDIAAN LAPANGAN PEKERJAAN SUSTAIN FULL EMPLOYMENT AND EMPOWER WORKERS TO PUSH FOR HIGHER WAGES

MAIN POLICIES A reduction in interest rates (monetary policy), A reduction in tax rate, and Government investment in infrastructure (fiscal policy).

A REDUCTION IN INTEREST RATES (MONETARY POLICY) INITIATED BY REDUCING INTEREST RATE AT CENTRAL BANK FOLLOWED BY REDUCING INTEREST RATE IN COMMERCIAL BANK TO AFFECT CUSTOMERS BORROWING (INVESTMENT)

A REDUCTION IN TAX RATES (FISCAL POLICY) INITIATED BY REDUCING PERSONAL INCOME TAX RATE FOLLOWED BY INCREASING OF REAL PURCHASING POWER AFTER TAX

GOVERNMENT INVESTMENT IN INFRASTRUCTURE (FISCAL POLICY) Investment by government in infrastructure injects income into the economy by creating business opportunity, employment and demand. Employment opportunity is the key goal Effectiveness of resources use is the tailored to national employment creation needed. Big government infrastructure need big capital from loan  fiscal deficits

CURRENT ADDITIONAL INDONESIA’S FISCAL POLICY REDUCING STATE-OWNED BANK DEPOSIT TO BUDGET FOLLOWED BY INCREASING CAPITAL TO INVEST INFRASTRUCTURE

BASIC CONCEPTS EMPLOYMENT  WAGES Nominal wages are set in negotiations between employers and workers nominal wage cuts would be difficult to put into effect because of laws and wage contracts nominal wage reductions ONLY can take place whenever labor see other wages falling and a general fall of prices

KEYNES KEY IDEAS Fiscal stimulus: raises the market for business output, raising cash flow and profitability, spurring business optimism. This accelerator effects meant that government and business = complements.

KEYNES KEY IDEAS As the stimulus occurs, gross domestic product rises, raising the amount of saving, helping to finance the increase in fixed investment. Government outlays need not always be wasteful: government investment in public goods that will not be provided by profit-seekers : 1.basic research, 2.public health, 3.education, and 4.infrastructure will encourage the private sector's growth and could help the long-term growth of potential output.

KEYNES KEY IDEAS In Keynes's theory, there must be significant slack in the labour market before fiscal expansion is justified. Keynesianism does not consist solely of deficit spending. Keynesianism recommends counter-cyclical policies: 1.Raising taxes to cool the economy and to prevent inflation when there is abundant demand-side growth, and 2.Engaging in deficit spending on labour-intensive infrastructure projects to stimulate employment and stabilize wages during economic downturns.

KEYNES KEY IDEAS Keynesian economists believe that adding to profits and incomes during boom cycles through tax cuts, and removing income and profits from the economy through cuts in spending during downturns, tends to exacerbate the negative effects of the business cycle. This effect is especially pronounced when the government controls a large fraction of the economy, as increased tax revenue may aid investment in state enterprises in downturns, and decreased state revenue and investment harm those enterprises.