HIPOTESIS TWIN DEFISIT DAN FELDSTEIN-HORIOKA INDONESIA MENGGUNAKAN PENDEKATAN ARDL (AUTOREGRESSIVE DISTRIBUTED LAG) PERIODE 1981-2019

A healthy and balanced economy is the ideal in many countries. However, along with the development of globalization, the ideal is difficult to be achieved. As a developing country, the Indonesian economy is heavily influenced by external conditions that can affect the balance of the domestic government budget. So there is a possibility of Twin Deficits and Feldstein Horioka conditions that will occur in Indonesia. This condition if it occurs continuously, it will endanger the Indonesian economy. This research was conducted to test and find the conditions of Twin Deficits and Feldstein Horioka since the pre-crisis period, in 1981 to 2019 using the ARDL (Autoregressive Distributed Lag) method. The dependent variable in this study is Current Account Balance (% GDP). Meanwhile, the independent variables in this study are Government Budget and Investment. The results in this study indicate that the Twin Deficits phenomenon in the long term and short term does not occur in Indonesia, where the budget deficit does not affect the current account deficit in the period of 1981 to 2019. This is consistent with the Ricardian Equivalence theory contained in the Twin Deficits theory. Meanwhile, the Feldstein Horioka phenomenon occurred in Indonesia in 1981-2019 in the long and short term, where the investment variable had a positive effect on the current account deficit