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This paper builds a regional macroeconomic model of DKI Jakarta and attempts to analyze the impacts of declining DAU revenues on the overall DKI Jakarta economy. The model uses microeconomic foundations, consists of four blocks, and is made up by 48 behavioral equations and 23 identities. The model adapts Doubinis? Chicago Metropolitan Area econometric model with some modifications. Two Stage Least Squares Methods are employed to estimate both parameters and prediction power of the model. There are two scenarios designed for forecasting, first, the scenarios of constant DAU of Rp 773,02 billion, and second, the scenario of 20% DAU decline. Comparing the constant and the declining DAU scenarios, the DAU decline does affect the growth of manufacturing sector and its number of employment, government investments, expenditures, and revenues, and the overall regional economy. However, this decline does not affect the activities in the non-manufacture sector and its employment, local government taxes and charges, and private consumptions and investments. Even though it affects the regional economy but the negative impact on growth is still less than 20%. |
