{"id":4368,"date":"2021-06-13T16:43:06","date_gmt":"2021-06-13T08:43:06","guid":{"rendered":"https:\/\/www.ukm.my\/jem\/?post_type=article&#038;p=4368"},"modified":"2021-09-09T12:29:56","modified_gmt":"2021-09-09T04:29:56","slug":"the-effect-of-intervening-variable-towards-twin-deficit-in-indonesia-the-application-of-path-analysis","status":"publish","type":"article","link":"https:\/\/www.ukm.my\/jem\/article\/the-effect-of-intervening-variable-towards-twin-deficit-in-indonesia-the-application-of-path-analysis\/","title":{"rendered":"The Effect of Intervening Variable towards Twin Deficit in Indonesia: The Application of Path Analysis"},"content":{"rendered":"<p><span class=\"fontstyle0\">This study examines twin deficits in Indonesia during the period of 1969-2015 using Path Analysis. Path analysis can test the direct and indirect effect of the variables studied and simultaneously identify the role of the intervening variables. Data used in this study include government budget deficit (<\/span><span class=\"fontstyle0\">BD<\/span><span class=\"fontstyle0\">) as the exogenous variable, interest rate (<\/span><span class=\"fontstyle0\">IR<\/span><span class=\"fontstyle0\">) and domestic exchange rate (<\/span><span class=\"fontstyle0\">FER<\/span><span class=\"fontstyle0\">) as the endogenous intervening variables, and deficit on the current account of balance of payment (<\/span><span class=\"fontstyle0\">DBOP<\/span><span class=\"fontstyle0\">) as the endogenous variable. This study found no direct effect between <\/span><span class=\"fontstyle0\">BD <\/span><span class=\"fontstyle0\">and <\/span><span class=\"fontstyle0\">DBOP<\/span><span class=\"fontstyle0\">. The finding indicates that an increase in budget deficit may not necessarily lead to an increase in current account deficits, and therefore do not prove twin deficits in Indonesia. Therefore, Mundell-Fleming\u2019s theory in Indonesia is not applicable because the role of intervening variables (<\/span><span class=\"fontstyle0\">IR <\/span><span class=\"fontstyle0\">and <\/span><span class=\"fontstyle0\">FER<\/span><span class=\"fontstyle0\">) in mediating twin deficits is relatively weak.<\/span><\/p>\n","protected":false},"template":"","tags":[697,551,696],"jel-code":[],"article-type":[1329],"class_list":["entry","author-jem","post-4368","article","type-article","status-publish","tag-intervening-variables","tag-path-analysis","tag-twin-deficits","article-type-normal-article"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Effect of Intervening Variable towards Twin Deficit in Indonesia: The Application of Path Analysis | Jurnal Ekonomi Malaysia<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ukm.my\/jem\/article\/the-effect-of-intervening-variable-towards-twin-deficit-in-indonesia-the-application-of-path-analysis\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Effect of Intervening Variable towards Twin Deficit in Indonesia: The Application of Path Analysis | Jurnal Ekonomi Malaysia\" \/>\n<meta property=\"og:description\" content=\"This study examines twin deficits in Indonesia during the period of 1969-2015 using Path Analysis. Path analysis can test the direct and indirect effect of the variables studied and simultaneously identify the role of the intervening variables. 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