Impact of the Global Crisis on Regional Economies in Indonesia : The Application of CGE Model for Province Maluku

This paper analyzes the global crisis impact on regional economy in Indonesia. Using the multi-region and multi-sector Computable General Equilibrium model, the result shows the magnitude of the impact depends on each provincial global shock exposure. In general, the capital intensive and the tradable sector face higher activity reduction. A specific simulation is designed for Province Maluku. The result shows that an increase of labour productivity is capable to reduce the global crisis impact and increase the production activity hence the labour participation. However, the increase of the aggregate demand in Province Maluku has put a higher inflation pressure mainly for the commodities supplied from other provinces. This requires a higher effort of the provincial government of Maluku to increase their sectoral capacity utilization