IJSRP, Volume 8, Issue 5, May 2018 Edition [ISSN 2250-3153]
Anggi Putri Kurniadi, Hasdi Aimon, Sri Ulfa Sentosa
This study investigates the sustainability of the current account deficits in Indonesia. We employed ECM (Error Correction Mechanism) approach to find out relationship in the long run and short run during 2000 quarter 1 up to 2015 quarter 4. The condition of the current account deficit is inseparable from the macroeconomic indicators. The results of the long run estimation of current account deficits is negatively influenced by real gross domestic product. In the short run estimation of current account deficits is positively influenced by real gross domestic products, real effective exchange rate, and the open economic. While negatively influenced by inflation. The research recommended to the financial policy authority relates to the fluctuation of macroeconomic variables for a policy-making basis on the sustainability the current account deficits in Indonesia, because this is one of the parameters that determine the economic performance of a country.