We build DSGE model for small open economy with financial friction in the form of collateral constrain on banking sector, designed for Indonesian economy. The constructed model is capable to simulate the monetary policy (Bank Indonesia rate) and macroprudential policy (reserve requirement, capital adequacy ratio – CAR, and loan to value – LTV). By internalizing banking sector into the model, this model also enable us to simulate the impact of any shock originated from banking sector.
Harmanta, Harmanta; Purwanto, Nur M. Adhi; and Oktiyanto, Fajar Oktiyanto
"INTERNALISASI SEKTOR PERBANKAN DALAM MODEL DSGE,"
Bulletin of Monetary Economics and Banking: Vol. 17:
1, Article 4.
Available at: https://bulletin.bmeb-bi.org/bmeb/vol17/iss1/4