Analysis of Inflation Determination in Indonesia, 2001-2015

DOI

10.2991/ebic-17.2018.4How to use a DOI?

Keywords

Inflation, Money Supply, BI Rate, Exchange Rate, Error Correction Model (ECM)

Abstract

The achievement of a low inflation target is a big agenda that is currently being carried by Bank Indonesia. This target is certainly not apart from the Central Bank's monetary policy strategy that implements Inflation Targeting (IT). This research aims to analyze the effect of the money supply, BI Rate, and exchange rate to inflation in Indonesia. The analysis is using the equation of cointegration by Error Correction Model (ECM) method. This study analyzes the relationship between the dependent and independent variables in both short terms or in the long term. The estimation results show that in the short term, there is a significant effect of BI Rate and exchange rate to inflation in Indonesia. ECM model is considered to be valid because of the significance value of Error Correction Term (ECT). However, in the long term, it is the variable BI Rate has a significant influence on the inflation in Indonesia. These results indicate that the importance of the role of the BI Rate in controlling the inflation rate for the stable of the economic condition.

Copyright

© 2018, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - T. Citra Nisa Farza
AU  - Mrs Fitrawaty
AU  - M. Yusuf Harahap
PY  - 2018/01
DA  - 2018/01
TI  - Analysis of Inflation Determination in Indonesia, 2001-2015
BT  - Proceedings of the 1st Economics and Business International Conference 2017 (EBIC 2017)
PB  - Atlantis Press
SP  - 22
EP  - 26
SN  - 2352-5428
UR  - https://doi.org/10.2991/ebic-17.2018.4
DO  - 10.2991/ebic-17.2018.4
ID  - Farza2018/01
ER  -