Resilience, Crisis and Innovation Dynamics
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Resilience, Crisis and Innovation Dynamics

Edited by Tüzin Baycan and Hugo Pinto

Resilience has emerged as a recurrent notion to explain how territorial socio-economic systems adapt successfully (or not) to negative events. In this book, the authors use resilience as a bridging notion to connect different types of theoretical and empirical approaches to help understand the impacts of economic turbulence at the system and actor levels. The book provides a unique overview of the financial crisis and the important dimension of innovation dynamics for regional resilience. It also offers an engaging debate as to how regional resilience can be improved and explores the social aspects of vulnerability, resilience and innovation.
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Chapter 6: The regional effects of macroeconomic shocks in Indonesia

Masagus M. Ridhwan and Pakasa Bary

Abstract

This chapter attempts to examine the effects of macroeconomic shocks across Indonesian regions. In doing so, we have developed structural macroeconomic models for 32 provinces, which are later estimated by around 28 pairs of ECM-based equations which represents demand-side output, supply-side output, monetary, fiscal, and prices in each economy. The responses are specifically evaluated due to four types of main shocks that are originated from both domestic economy based on credit volumes and administered price inflation, while from external shocks we use world output and exchange rate shocks, respectively. Our findings indicate there are systematic differential responses to the common shocks on both provincial output and inflation, that may well be related to the individual provincial economic structures and its specific characteristics. Java – the most developed and diversified economy – tends to be more resilient to the shocks relative to the off-Java regions. The models and estimation results tend to be robust by fulfilling classical econometrics assumptions and well-present the standard macroeconomic theory. The results also assert the importance of regional economic structures and characteristics in formulating nationwide macroeconomic policy.

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