SNOWBALL EFFECT OF INTEREST RATE AS A CONTROL INSTRUMENT ON INFLATION FRAMEWORK TARGETINGIN INDONESIA

Sriyono, Sriyono SNOWBALL EFFECT OF INTEREST RATE AS A CONTROL INSTRUMENT ON INFLATION FRAMEWORK TARGETINGIN INDONESIA. universitas muhammadiyah sidoarjo. ISSN 168820300032

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Abstract

After the monetary crisis the government changes its monetary policy strategy by using a new paradigm that Inflation Targeting framework. This new paradigm has been confirmed in Law No.23 of 1999 and UU No 3 of 2004 as the basis for the application of Inflation Targeting Framework in Indonesia The purpose of this study was to determine whether interest rates only impact on inflation or even cause greater impact on other monetary variables. It is very important to know the impact by knowing the impact it can avoid unwanted conditions Data of research is collected since 1970 to 2013, hypothesis testing is used econometric models. The main advantages of econometric models for being able to handle the mutual dependence (interdependence). Beside that econometric model is an invaluable tool for understanding the workings of the economic system and so to test and evaluate policy alternatives and hypothesis testing using multiple regression. The result of this study showed that this study indicate the interest rate turns out not only as an instrument of control of Inflation Targeting Framework but cause a snowball effect on other monetary variables that further strengthen the mechanism on Inflation Targeting Framework.

Item Type:	Article
Subjects:	H Social Sciences > HG Finance
Divisions:	Postgraduate > Master's of Management
Depositing User:	Sriyono Sriyono
Date Deposited:	11 Aug 2020 04:00
Last Modified:	11 Aug 2020 04:00
URI:	http://eprints.umsida.ac.id/id/eprint/7777

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