The Role Of Interest Rates And Provincial Monetary Aggregate In Maintaining Inflation In Indonesia

Chandra Utama (), Miryam B.L. Wijaya () and Charvin Lim ()
Additional contact information
Chandra Utama: Parahyangan Catholic University
Miryam B.L. Wijaya: Parahyangan Catholic University
Charvin Lim: Parahyangan Catholic University

Bulletin of Monetary Economics and Banking, 2017, vol. 19, issue 3, 267-286

Abstract: Inflation is a regional phenomenon hence the use of provincial data might be more appropriateon explaining the relationship between monetary policy and inflation. This paper analyzes the impact of changes in provincial money supply, the policy rate, and the interbank rate on regional inflation, within the framework of Hybrid New Keynesian Phillips Curve (HNKPC). This paper employs Generalized Method of Moments (GMM) on panel data of 32 provinces from 2005-III to 2014-IV. The estimation result shows that provincial monetary aggregate influence inflation significantly only in Sumatera. Furthermore, the policy fate affects the inflation in Sumatera and Kalimantan-Sulawesi. Using the interbank money rate, the result shows this rate also affect the inflation in most of the region except Kalimantan-Sulawesi. These findings show the price-based policy is more significant on affecting the provincial inflation compared to the provincial money supply.

Keywords: Monetary policy; regional inflation; hybrid NKPC (search for similar items in EconPapers)
JEL-codes: E31 E52 R19 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://bulletin.bmeb-bi.org/cgi/viewcontent.cgi?article=1156&context=bmeb (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:19:y:2017:i:3a:p:267-286

DOI: 10.21098/bemp.v19i3.666

Access Statistics for this article

Bulletin of Monetary Economics and Banking is currently edited by Paresh Narayan

More articles in Bulletin of Monetary Economics and Banking from Bank Indonesia Contact information at EDIRC.
Bibliographic data for series maintained by Lutzardo Tobing ( this e-mail address is bad, please contact ) and Jimmy Kathon ().