Journal ArticleDOI
Towards improved monetary policy in Indonesia
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In this article, the authors argue that there is a close medium to long-term relationship between money growth and inflation in Indonesia, and that this has not been greatly disturbed by the crisis, and they argue that the country's disappointing performance in relation to maintaining the value of the rupiah can be explained by the failure to sterilise the monetary impact on base money of its last-resort lending to the banks.Abstract:
Indonesia's depreciation vastly exceeded that of all other countries hit by the Asian crisis. Indonesia also experienced far higher inflation. This paper argues that there is a close medium to long-term relationship between money growth and inflation in Indonesia, and that this has not been greatly disturbed by the crisis. It argues that the country's disappointing performance in relation to maintaining the value of the rupiah can be explained by the central bank's failure to sterilise the monetary impact on base money of its last-resort lending to the banks. The fundamental lesson is that Bank Indonesia would be well advised to adopt slow and steady growth of base money as the nominal anchor for monetary policy, now that the pre-crisis policy of slow and steady depreciation of the rupiah has been abandoned.read more
Citations
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Journal ArticleDOI
Exchange Rate Changes and Inflation in Post-Crisis Asian Economies: Vector Autoregression Analysis of the Exchange Rate Pass-Through
Takatoshi Ito,Kiyotaka Sato +1 more
TL;DR: In this article, the authors examined the pass-through effects of exchange rate changes on the domestic prices in the East Asian economies using a vector autoregression analysis, and found that the degree of exchange-rate passthrough to import prices was quite high in the crisis-hit economies, with a notable exception of Indonesia, both the impulse response of monetary policy variables to exchange rate shocks and that of CPI to monetary policy shocks were positive, large, and statistically significant.
ReportDOI
Exchange Rate Changes and Inflation in Post-Crisis Asian Economies: VAR Analysis of the Exchange Rate Pass-Through
Takatoshi Ito,Kiyotaka Sato +1 more
TL;DR: In this paper, the authors examined the pass-through effects of exchange rate changes on the domestic prices in the East Asian countries using a VAR analysis including several price indices and domestic macroeconomic variables as well as the exchange rate.
Posted Content
Exchange Rate Policy and Reserve Management in Indonesia in the Context of East Asian Monetary Regionalism
Reza Siregar,Ramkishen S. Rajan +1 more
TL;DR: This article examined the behavior of rupiah over the last eight years (1995 - 2003) to ascertain whether in fact there is specific evidence of a return to de facto US dollar peg in Indonesia.
Posted Content
Pass-Through of Exchange Rate Changes and Macroeconomic Shocks to Domestic Inflation in East Asian Countries
TL;DR: In this article, the authors examined the pass-through effects of exchange rate changes on the domestic prices among the East Asian countries using the conventional passthrough equation and a vector autoregression (VAR) analysis.
Journal ArticleDOI
The IMF and the Indonesian crisis
TL;DR: The IMF's initial policy prescription was in keeping with the nature of the crisis, characterised by a reversal of foreign capital inflows, interacting with a weak domestic financial sector as discussed by the authors.
References
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Book ChapterDOI
A Monetary and Fiscal Framework for Economic Stability
TL;DR: For example, this paper pointed out that since the Great Depression of the 1930s, the focus of economic analysis has been on short-run fluctuations of a cyclical character, and that inadequate attention is given to the possibility of satisfying both sets of objectives simultaneously.
Book
Building a Modern Financial System: The Indonesian Experience
David C. Cole,Betty F. Slade +1 more
TL;DR: In this article, the authors describe the evolution of Indonesian financial development, including the emergence of the capital market and the modernizing the insurance industry and pension system, and some lessons from Indonesian experience.
Journal ArticleDOI
Towards implementation of inflation targeting in indonesia
TL;DR: In this paper, the authors explore the future framework of monetary policy under a formal IT approach and highlight the constraints Bank Indonesia faces in implementing such an approach, and outline a preliminary design for a suitable IT framework for Indonesia.
Journal ArticleDOI
Bank Indonesia and The Recent Crisis
TL;DR: In this article, a personal note describing the crisis as it unfolded while the writer was a key player in Indonesia's macroeconomic management is presented. But the authors do not discuss the role of the IMF in the crisis.