Projecting the long run impact of an economic reform: the case of the Indonesian Omnibus Law

Crawford School of Public Policy
Photo by CEphoto, Uwe Aranas / CC-BY-SA-3.0

Event details

PhD Seminar (Econ)

Date & time

Friday 26 November 2021


Online via Zoom


Krisna Gupta

Indonesia has been trying to improve its investment climate. The recent development is the issuance of ‘Job Creation Law’ which emphasises risk-based business regulation, promotion of a new Ministry of Investment, and aiming for better investment climate overall. On top of that, Indonesian government established a new body called “Indonesia Investment Authority”. This paper discusses the changes introduced by ‘Job Creation Law’ and how it can be captured policy simulations. It then looks to simulate the impact of successful implementation of the reform. The paper uses the GDyn-FS, a modified Dynamic GTAP model proposed by Gretton (forthcoming) that captures the recursive dynamic of changes in investment to a countries’ macroeconomic and industrial level changes. The analysis also takes into account changes caused by COVID-19 to Indonesia’s trajectory baseline. The result reflects a new trajectory of Indonesian economy in the situation where risk premia is lower, shown by reduced targeted rate of return.

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