| dc.description.abstract | The contraction of economic growth in 2020 is inseparable from the negative impact of the coronavirus pandemic which has caused household consumption to fall. The government's strategy for national economic recovery is carried out by taking comprehensive fiscal and monetary policies. This study wants to prove the Mundell Fleming theory which suggests that monetary policy is more effective than fiscal policy in a small open economy with perfect capital flows. This study uses a quantitative approach with the Two Stage Least Square (TSLS) model. The variables used in this study are economic growth, money supply, net exports, inflation, BI rate, Jakarta composite index (IHSG), US economic growth, and rupiah exchange rate. The results showed that fiscal policy proxied by government spending variables is more effective than monetary policy proxied by the money supply in Indonesia. The Mundell Fleming model cannot be applied in Indonesia during the study period. Therefore, it is important for the government to pay attention to the policy mix between fiscal and monetary stimulus in the policy- making process. | en_US |
