## Indonesia: Selected Issues

_IMF Staff Country Reports, July 31, 2019_

## Source details

**Canonical URL:** [Indonesia: Selected Issues](https://www.imf.org/en/publications/cr/issues/2019/07/30/indonesia-selected-issues-48536)

## Other formats

- [Markdown version](/en/publications/cr/issues/2019/07/30/indonesia-selected-issues-48536/index.md)
- [Structured JSON version](/en/publications/cr/issues/2019/07/30/indonesia-selected-issues-48536/index.json)
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## Bibliographic details
- Published: July 31, 2019
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513509136.002

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### Overview of the analysis
- Uses data on monthly export and import price and volume at the sectoral level to estimate pass-through effects of exchange rate changes to trade price and volume.
- Identifies adjustment frictions that depend on the source of the exchange rate fluctuation and the degree of integration in global value chains.

### Key findings on pass-through and trade
- Combining price and volume effects, a 10 percent depreciation in the exchange rate is associated with a rise in the goods net-exports of up to 1.6 percent of GDP.
- Considerable asymmetry and sectoral heterogeneity in pass-throughs of exchange rate on import and export prices.
- Import prices:
  - Adjust well to exchange rate fluctuations.
  - Effects are stronger for appreciation episodes.
- Export prices:
  - Price sensitivity to exchange rate shocks is generally lower than for imports.
  - Sensitivity is concentrated over shorter horizons and during episodes of depreciation.

### Implications for the current account
- The price and quantity results imply that exchange rate changes can have significant effects on the current account by affecting movements in net-exports of goods.

### Data and methodology highlights
- Sectoral monthly data on export and import prices and volumes were employed to estimate pass-through coefficients and capture heterogeneity across sectors and episodes.

### Subject areas and keywords
- Subject: Corporate income tax, Exchange rates, Foreign exchange, Medium term revenue strategy, Revenue administration, Revenue performance assessment, Tax administration core functions, Taxes, Value-added tax
- Keywords: Corporate income tax, CR, Exchange rates, Global, ISCR, market, market rate, Medium term revenue strategy, monetary policy decision, monetary policy press releases, monetary policy report, pass-through, pass-through coefficient, price, rate, Tax administration core functions, upside risk, Value-added tax

*Source: Indonesia: Selected Issues (July 31, 2019).*

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## Content in this bundle

- **Indonesia: Selected Issues; IMF Country Report No. 19/251; June 17, 2019**
  - [Indonesia: Selected Issues; IMF Country Report No. 19/251; June 17, 2019 (Markdown version)](/-/media/files/publications/cr/2019/1idnea2019002.pdf.md){rel="alternate" type="text/markdown"}
  - [Indonesia: Selected Issues; IMF Country Report No. 19/251; June 17, 2019 (PDF)](/-/media/files/publications/cr/2019/1idnea2019002.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2019/07/30/indonesia-selected-issues-48536_