ASYMMETRIC IMPACTS OF MONETARY POLICY SHOCK ON OUTPUT GAP: EVIDENCE FROM REGIONS IN INDONESIA

Sugeng Triwibowo () and Defy Oktaviani ()
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Sugeng Triwibowo: Universitas Gadjah Mada, Yogyakarta, Indonesia
Defy Oktaviani: Universitas Indonesia, Depok, Indonesia

Bulletin of Monetary Economics and Banking, 2022, vol. 25, issue 3, 371-398

Abstract: We examine the impact of the monetary policy on regional output gaps across 33 Indonesian provinces. Heterogeneous regional responses of the output gap to monetary policy shock are captured using the Vector Autoregressive model. Moreover, the idiosyncratic variations across provinces accounted for different responses are observed with the spatial econometric model. The spatial analysis suggests that economic structure and financial depth positively and significantly determine the aforesaid asymmetric responses. On the other hand, economic size and trade openness have a negative impact on them.

Keywords: Monetary policy; Output gap; Spatial model (search for similar items in EconPapers)
JEL-codes: C21 E32 E52 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:25:y:2022:i:3d:p:371-398

DOI: 10.21098/bemp.v25i3.1648

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