Monetary Policy and Trade Balance in Indonesia: Evidence from a Structural VAR Analysis

Lestano Lestano

Economics and Finance in Indonesia, 2009, vol. 57, 181-202

Abstract: This paper investigates the response of the trade balance to monetary policy innovations for the Indonesia economy using a Structural Vector Auto Regressive (SVAR) model. We estimate three type of SVAR models using monthly data, that is, for full sample (1980:M1 until 2005:M3), p re- (1980:M1-1997:M6), and post-Asian crisis periods (1998:M1-2005:M3). The aim of splitting full sample size is to take into account a sensibility of structural break due to the onset of Asian financial crisis in 1997-1998. The dynamic properties of the model are discussed and monetary policy shocks identified by means of various impulse responses and a variance decomposition.

Keywords: Monetary Policy; Exchange Rate; Trade Balance; Structural VAR; Indonesia (search for similar items in EconPapers)
JEL-codes: C32 E52 F41 (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:lpe:efijnl:200909

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