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Monetary policy and the causality between inflation and money supply in Indonesia

Business: Theory and Practice

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Field Value
 
Title Monetary policy and the causality between inflation and money supply in Indonesia
 
Creator Sasongko, Gatot
Huruta, Andrian Dolfriandra
 
Subject inflation
macroeconomic policy
money supply
public policy
 
Description Conceptually and empirically, inflation volatility in Indonesia is a monetary and fiscal phenomenon. This study focuses on the macroeconomic policy and public policy especially causality between two variables namely inflation and money supply in Indonesia. This study uses Indonesian macroeconomic data of inflation and money supply from the Bank of Indonesia publication during 2007.1–2017.7. Inflation is measured by the consumer price index, reflects the annual percentage change in costs of acquiring a basket of goods and services to the average consumers that may change at specified intervals. Meanwhile, money supply is measured by the currency, demand deposits, time deposits, and saving deposits. Methodically, this study uses the Granger Causality model to determine the causality between inflation and money supply. The results show that there is a one-way causality between inflation and money supply in Indonesia. These findings imply that money supply causes inflation, but not vice versa. This condition implies that the role of Indonesian Government and Bank of Indonesia were very crucial in managing and controlling macroeconomic policy and public policy. Then, analysis of money supply and inflation also related to impacting factors such as money laundering, role of banks, taxation, tax evasion, and corruption.
 
Publisher VGTU Press Technika
 
Date 2018-05-30
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.btp.vgtu.lt/index.php/BTP/article/view/7947
10.3846/btp.2018.09
 
Source Business: Theory and Practice; Vol 19 (2018); 80-87
1822-4202
1648-0627
 
Language eng
 
Relation http://www.btp.vgtu.lt/index.php/BTP/article/view/7947/6888
 
Rights Copyright (c) 2018 Published by VGTU Press