Document Type
Article
Abstract
This paper explains stylized facts about the monetary economy in Indonesia covering the Bank Indonesia (BI) policy on the exchange rate, lending rates, inflation, real effective rate (REER), and growth. This is done to get an understanding on the impact of foreign policy (influenced by the Fed) on Indonesia’s monetary economy, with some attention to the fund rate. An empirical model of VAR (Vector Auto Regression) was developed to capture the impact of an increase in fund rate to Indonesia’s monetary sector. Furthermore, a theoretical model was developed to capture the result from empirical model. The theoretical model shows that the increase of fund rate influenced the increase of BI rate, lending rate, inflation, while reducing REER and growth. Keyword: monetary policy, lending rate, inflation, exchange rate.JEL Classification: E52, F41
Recommended Citation
Juoro, Umar
(2013)
"Monetary Policy Model for Open Economy of Indonesia,"
Bulletin of Monetary Economics and Banking: Vol. 16:
No.
1, Article 1.
DOI: https://doi.org/10.21098/bemp.v16i1.438
Available at:
https://bulletin.bmeb-bi.org/bmeb/vol16/iss1/1
First Page
73
Last Page
86
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License
Country
Indonesia
Affiliation
Center for Information and Development Studies