"Does Inflation Targeting Framework Make a Significant Difference in Lowering Price Level?" What is Its Implication to Indonesia’s Inflation Rate?

Faisal Rachman ()
Additional contact information
Faisal Rachman: Master Degree in Public Policy, Lee Kuan Yew School of Public Policy, National University of Singapore

Economics and Finance in Indonesia, 2015, vol. 61, 131-147

Abstract: In the last two decades many countries have been starting to employ Inflation Targeting Framework (ITF) as their main monetary policy framework. This is done to achieve an objective of anchoring public expectation on inflation which in the end will steer the price level movement towards ITF’s ultimate target of relatively low and stable inflation rate. By conducting Difference-in-Difference method on panel data consisting of 5 countries implementing ITF since 2001 and 21 selected non-ITF countries for period 1990–2010, it is statistically proved that ITF adoption has a significant effect on inflation. In case of Indonesia, through Structural Break approach, the implementation of ITF since 2005 is also proved able to lower and stabilize inflation rate.

Keywords: Inflation; Inflation Targeting; Monetary Policy; Difference-in-Difference; Structural Break (search for similar items in EconPapers)
JEL-codes: E31 E52 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://lpem.org/repec/lpe/efijnl/201510.pdf (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:lpe:efijnl:201510

Access Statistics for this article

More articles in Economics and Finance in Indonesia from Faculty of Economics and Business, University of Indonesia Contact information at EDIRC.
Bibliographic data for series maintained by Muhammad Halley Yudhistira ( this e-mail address is bad, please contact ).