 Real exchange rate targeting and inflation in Indonesia: theory and empirical evidenceNo 96-07, Pacific Basin Working Paper Series from Federal Reserve Bank of San Francisco Abstract: Early studies have shown that an exchange rate policy which attempts to stimulate exports through aggressive devaluations is often found to be inflationary. This study tests the validity of this hypothesis for the specific case of Indonesia. To analyze the possible inflationary consequence of the managed floating system of Indonesian rupiah, this paper conducts several times series testings to answer the following questions: (1) Can the study detect any significant effects of government's intervention in the foreign exchange market (forex) in explaining the fluctuations of rupiah?, (2) Has the current practice of managed floating system been inflationary?, and (3) In the final analysis: can the study conclude that the exchange rate management in Indonesia does directly and significantly contribute to the high rates of inflation in the recent years, 1990-1995? Keywords: Indonesia; Foreign exchange - Law and legislation; Inflation (Finance) (search for similar items in EconPapers) Published in Applied Financial Economics (August, 1999, v. 9, no. 4, p329-336) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:fip:fedfpb:96-07 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in Pacific Basin Working Paper Series from Federal Reserve Bank of San Francisco Contact information at EDIRC. |
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