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A New Monetary Era and the Necessity of Exchange Rate Policy Reformulation for Macroeconomic Performance: the Inclusive Nominal Exchange Rate (INEX). Lessons from Indonesia in ASEAN-10

Advances in Social Sciences Research Journal

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Title A New Monetary Era and the Necessity of Exchange Rate Policy Reformulation for Macroeconomic Performance: the Inclusive Nominal Exchange Rate (INEX). Lessons from Indonesia in ASEAN-10
 
Creator Moro, Kadjo Daniel Bitty
Mursinto, Dr. Djoko
Purwono, Dr. Rudi
 
Subject —
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Description This paper is actually part of a research that was conducted in twenty five countriesfrom the Association of Southeast Asian Nations (ASEAN-10) and the Economic Communityof West African States (ECOWAS-15) about the factual correlation between exchange rateand five macroeconomic variables. However, here, we focus on the case of Indonesia, thelargest economy of the regional integrated area ASEAN. The study starts from the fact thatnowadays, because of the growing openness of national markets, no longer the interest ratebut the exchange rate appears to be the single monetary tool that can be used tosimultaneously boost economic growth and protect national economic fundamentals againstadverse external shocks, but how? That question constitutes the major concern of this article.Using secondary macroeconomic data, this paper has adopted a mixed-methodology approachbased on a correlation test and statistical mapping technique analysis which constitutes thenovelty compared to previous studies on monetary issues. The paper reveals that Indonesia,under floating exchange rate regime has successfully controlled inflation rate but at theexpense of the GDP growth. The major finding of this study is a proposal for new formulationof the exchange rate valuation named: the “Inclusive Nominal Exchange rate” (INEX) whichis based on real economic performances of a country and the structure of its economy. Anillustration of the INEX showed that in 2014, the macroeconomic fundamentals of Indonesiawere better but, the nominal exchange rate failed to capture that performance.
 
Publisher Advances in Social Sciences Research Journal
 
Contributor —
 
Date 2016-04-26
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.scholarpublishing.org/index.php/ASSRJ/article/view/2002
10.14738/assrj.34.2002
 
Source Advances in Social Sciences Research Journal; Vol 3, No 4 (2016): Advances in Social Sciences Research Journal
10.14738/assrj.34.2016
 
Language eng
 
Relation http://www.scholarpublishing.org/index.php/ASSRJ/article/view/2002/1139
 
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