The Effect of Transfering Israel Capital City to Jerusalem Toward Indonesia Macro Economy

Abstract

United States President, Donald Trump, issued a controversial policy recognizing Jerusalem as the Capital of Israel. The political impact of these policies has an impact on the global economy. World stock exchanges immediately reacted, including the fall of stock exchanges in Asia. The impact of these policies also impacted the Indonesian economy. The policy triggered an increase in the exchange rate of US$ against the Rupiah. Another negative effect is the increase in world crude oil prices. The increase in world crude oil prices impose a fiscal burden on the state budget. The fuel subsidy in the state budget has increased along with the increase in world crude oil prices. The policy also affects the inflation rate and SBI. Throughout 2018, Bank Indonesia has raised SBIs by 150 basis points or 1.5%. Determination of high SBI has an effect to reduce inflationary pressures. This study aims to look at the effect of moving the Israeli capital to Jerusalem on Indonesian macroeconomic variables, namely the inflation rate, SBI and the exchange rate of the rupiah against US $. Oneway ANOVA method was used as the method of analysis in this study. The research data used is the monthly report of Bank Indonesia from January 2017 to December 2018. The research results obtained are that there is an influence of the move of the Capital of Israel to Jerusalem on Indonesian macroeconomic indicators, namely the inflation rate, SBI and the exchange rate of the rupiah against US$.