THE EFFECT OF CENTRAL BANK INDEPENDENCE ON PRICE STABILITY: THE CASE OF INDONESIA

Authors

Yessy Andriani
Prasanna Gai

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, 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 8.
DOI: https://doi.org/10.21098/bemp.v15i4.72
Available at: https://bulletin.bmeb-bi.org/bmeb/vol15/iss4/8

First Page

367

Last Page

390

Creative Commons License

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

Country

Australia

Affiliation

Australian National University