A NON-PARAMETRIC STUDY ON THE ADVERSE EFFECTS OF THE US-ISRAEL AND IRAN 40-DAY WAR ON THE INDONESIAN ECONOMY

Abstract

In the realm of non-parametric analysis, Indonesia’s mostly affected concerns are the energy shock affecting the national government’s fiscal policy, monetary policy, and financial system development. The study has compared the economic conditions between the pre-war period and wartime period during the US-Israel and Iran 40-day war using Spearman rank order test, as well as Wilcoxon shared-rank to test the differences. Both techniques have tested and indicated that the war has a profound impact temporarily, but it doesn’t cause structural shift to the economy; i.e. resulting in a relatively large oil subsidy, the deteriorating Rupiah, downgrading risk of the existing Emerging Equity Market by Morgan Stanley Capital International (MSCI), and several others. Expediting the existing oil refineries, higher degree of B40/B50 formation, right allocation of the Indonesian national government budget, and increase of its GDP, are encouraged.

Keywords— Fiscal, GDP, IDX, IHSG, Monetary, Non-Parametric, Oil Price Shock