Zero Lower Bound for Exit Policy to Scarring Pandemic Effect on Indonesia's National Economy

Abstract

Developed countries adopted a Zero Lower Bound (ZLB) policy as an option to accelerate economic recovery. In this study, the authors aim to systematize and assess existing data to build simulations of ZLB implementation in Indonesia. The data use 12 indicators from 2017-2021. Data are analyzed using Autoregressive Distributed Lag Model (ARDL). The results of data processing show that there are an upward trend in 2022, especially for the inflation rate, consumer price index, capacity utilization, residential property price index, broad money, and production index. Other indicators such as lending facilities, investment realization and savings facilities tend to be flat. Meanwhile, other indicators such as unemployment, average wages, and the exchange rate show downward trend. This research also provides updates on the possibility of implementing ZLB policy recommendations in Indonesia and can be used as exit policies for the scarring effect of the pandemic on the Indonesia's national economy.