DETERMINANTS OF INFLATION IN INDONESIA: DYNAMICS OVER A DECADE

Donni Anugrah, Retno Muhardini, Wahyoe Soedarmono and Zaki Intan Cindyagita
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Retno Muhardini: Bank Indonesia
Zaki Intan Cindyagita: Bank Indonesia

No WP/09/2023, Working Papers from Bank Indonesia

Abstract: Inflation is a crucial topic that has been extensively researched by academics and government authorities, including central banks as monetary authorities. Maintaining inflation at a stable and low level is a fundamental basis for improving the well-being of the population and sustaining economic growth. This research aims to conduct a comprehensive literature review of Bank Indonesia's internal research and studies on inflation, with the objective of identifying research gaps to recommend future research directions. Through a literature survey method, 149 research outcomes/internal studies published by Bank Indonesia from 1965 to 2022 in the Bank Indonesia's internal repository were collected and reviewed. Findings from this literature study provide a complex overview of the factors influencing inflation and the policies required to achieve sustainable price stability in Indonesia. The review in this study encompasses inflation from basic theory, spatial aspects, inflation disaggregation, medium-run price formation, Phillips Curve theory, and various other empirical analyses. Differences in inflation literature findings between the preInflation Targeting Framework (ITF) and post-ITF periods are also discussed. Several recommendations are proposed, including suggestions for research that support intensified multidisciplinary studies and a deeper understanding of inflation.

Keywords: Inflation; Monetary Policy; Inflation Targeting; Literature Study (search for similar items in EconPapers)
JEL-codes: E31 E52 E61 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2023
New Economics Papers: this item is included in nep-mon and nep-sea
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