The Effect of Central Bank Independence on Price Stability: The Case of Indonesia

Authors

Yessy Andriani, Australian National University
Prof. Prasanna Gai, Australian National University

Document Type

Article

Abstract

This paper investigates the relationship between central bank independence (CBI) and inflation in Indonesia during 1970-2006. Using partial adjustment Ordinary Least Square (OLS) and Engel Granger Error Correction Model, the result shows that legal CBI index inversely affect the inflation, while the turnover of governor is not significant. This result emphasizes Bank Indonesia to strengthen its independency in order to achieve his inflation target. Keywords: Central bank independency, Inflation, Error Correction Model.JEL Classification : C32, E58

Recommended Citation

Andriani, Yessy and Gai, Prof. Prasanna (2013) "The Effect of Central Bank Independence on Price Stability: The Case of Indonesia," Bulletin of Monetary Economics and Banking: Vol. 15: No. 4, Article 3.
DOI: https://doi.org/10.21098/bemp.v15i4.431
Available at: https://bulletin.bmeb-bi.org/bmeb/vol15/iss4/3

First Page

353

Last Page

376

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Country

Australia

Affiliation

Australian National University