DAMPAK KEBIJAKAN INFLATION TARGETING TERHADAP BEBERAPA VARIABEL MAKROEKONOMI DI INDONESIA

Yati Nuryati, Hermanto Siregar and Anny Ratnawati
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Yati Nuryati: Bogor Agricultural University
Hermanto Siregar: Bogor Agricultural University
Anny Ratnawati: Bogor Agricultural University

Bulletin of Monetary Economics and Banking, 2006, vol. 9, issue 1, 113-134

Abstract: This paper discusses the effects of the inflation targeting framework on a number of macroeconomic variabels in Indonesia, especially after the enactment of Law No. 23/1999. The objectives of the paper are: (1) to describe the independence aspect of the inflation targeting policy; and (2) to highlight the effects of the inflation targeting on a set of main macroeconomic variables. The anaysis uses the Vector Autoregression (VAR) approach, emploting the time series data during the periode of 1998:1 to 2003:6. The main results of this research are: (1) The Central Bank (BI) independence is not yet effective in the implementation of the inflation targeting; (2) the shock on the interest rate affects price level and the exchange rate trivially; and (2) the factors that influence price’s variability are the base money, the interest rate, and the exchange rate. In the long run, a shock to the base money is more important than to the interest rate and to the exchange rate. The study suggests to use base money as the policy instrument of the monetary policy, instead of the short term interest.

Keywords: Monetary Policy; Independence; Inflation Targeting; VAR (search for similar items in EconPapers)
JEL-codes: C32 E31 E52 (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:9:y:2006:i:1d:p:113-134

DOI: 10.21098/bemp.v9i1.153

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