This is a joint seminar between Indonesia Study Group and the Arndt-Corden Department of Economics

The tapering talk in 2013 had serious impacts on some emerging market countries i.e. Indonesia, India, Brazil, South Africa and Turkey (the so-called fragile five). To face pressures in the financial market, these countries each undertook a series of macroeconomic policy efforts. Interestingly, Indonesia and India were able to handle the problem in the shortest time and succeeded in macroeconomic stabilisation, evidenced by the decrease in their current account deficit and the stabilisation of their financial markets.

This lead us into questions of why was Indonesia relatively successful in facing the Taper Tantrum and breaking out from the Fragile Five? What policies were undertaken and why were they chosen? Equally important is to understand the political economy process behind these policies. These questions are the focus of this paper.