Impact of Budget Deficit Policy Essay

Impact of Budget Deficit Policy Essay

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I. Introduction
With an outline development goal who will achieved through the policy of macro economy is in order to reach the level of unemployment is low gainful price stability, economic growth as expected and distribution income it equal. To achieve development goal the government allocated to finance through budget state that are arranged every year.
One of the fiscal policies implemented that related to the budget is a budget deficit, a policy which the state revenues are less than the state expenditure. To overcome the lack of revenues, effected by way of debt owed, whether sourced from domestic and abroad, issued a bond, or by printing money (Seignior age).
Indonesia there has been a change in the policy of state revenues and state expenditures (the state budget) on the “New Orde” era and the “Reformation” era. In the “New Orde” era applied a policy of budget and state expenditures balanced and dynamic. The state budget balanced and dynamic it was introduced by the cabinet Ampere in the early of “New Orde” government by inserting foreign loans as part the higher state revenues. The policy of the state budget is balanced and dynamic at a time when it is applied to address the problem of hyper-inflation occurring at the time it up to 650 percent due to excessive printing money to overcome deficits budget in 1966. In five years since enactment of a policy of state budget balanced and dynamic was able to curb the inflation from the level of 650 percent to the inflation rate that normal. The policy of state budget balanced dynamic is still applied until 1999. Fiscal policy in the management of the state budget, who in the “New Orde” era known with the policy of state budget balanced and dynamic by including foreign loans as...

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Setyowati, E., 2011. Model Dinamis Pertumbuhan Ekonomi, Inflasi, dan Pengangguran di Indonesia, Jurnal Ekonomi dan Bisnis. 5 (3):221-235.
Suryahadi, A., Suryadarma, D., dan Sumarto, S., 2006. Economic Growth and Poverty Reduction in Indonesia: The Effects of Location and Sectoral Components of Growth, SMERU working paper.
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