Vol. VIENo. 01,2006 lial 81-103, DAMPAK PEMBIAYAAN DEFISIT ANGGARAN DENGAN UTANG LUAR NEGERI TERHADAP JNFLASI DAN PERTUMBUHAN EKONOMI: Studi Kasus Indon Tahun 1970 — 2003 Joko Watuyo* ABSTRACT The main purpose of this study isto find the effect of budget deficit with foreign loans as source of funding on inflation and economic growth. This study focuses on transmission ‘mechanism of budget deficit funding effects on inflation and economic growth, We use a specific simultaneous macroeconomic model which includes 17 behavioral equations and 18 identity equations with 6 blocks in this study, Two Stage Least Square (TSLS) method is employed t0 estimate the behavioral equations in the model. This study use Indonesia secondary economic data from 1970 10 2003. Econometric tests are performed to produce BLUE estimator. This study also use stochastic simulation with 10,000 replications 0 simulate policy. The results show that using frcign loon o furd budget deficit increases both economic growth and inflaton. This result is also supported by the silation results which show ‘that increase in the proceeds of new foregn loan increases reserves which in tum increase primary money’money supplyionetary base. Ineracion of monetary base with ‘money muliplier then increases price ievel. increase in capital inflow from Increase In Joreign loan increases government spending which also increases gowrnment spending Increases in the government spending then add to government capital stock 30 that economic growihalia tcreases Keywords + Budge: Deficit, Forelgn Debt, Inflation, Economic Grovth JEL Classifications 00, H62, H63 1 PENDAHULUAN Li, Latar Belakang Ju defist anggaranmendapatkan petbatian yang cukup luas dalam Kebijakan makrockonomi, sebagai program stabilisasi ekonomi di negara-negara yang sedang berkembang maupun negare-negara maju pada era 1990-an sampai dengan sekarang. Di negare-negara maju isu dfisit fiskal menjadi tpik pembicaraan tentang kebjakan fiskal ppemerintah di masa yang akan datang. Sedangkan di negare-negara sedang berkembang disebabkan oleh era over indebiness yang disertai dengan Iu iflai Sta Pengaar Departmen Inn Ekonomi, Faultas Ekonomi, Universitas Pembangunan Nasional ~Veterm” *fogyskar: Saf Penelit Lembaga Penelitan Ekonomi dan Sosa (L.PES) Yogyakarta, ‘waluyo01 @yahoo com.