The Sources and Dynamics of Inflation in Indonesia: An Ecm Model Estimation for 1952-2002

Abstract

This paper uses annual data for the period 1952-2002 to investigate the inflationary process in Indonesia within the cointegration-and error-correction modeling framework. The empirical results suggest that the consumer price index (CPI), the stock of narrow (M1) or broad money (M2) and real permanent income form a (weakly) cointegral relationship for the complete sample period. This relationship remains broadly stable for several sub-samples, especially when the model is estimated with a narrow definition of money. The dynamic relationship between money, output, prices, and the exchange rate is investigated within a general-to-specific error-correction modeling framework. The presence of a significant error-correction term implies that given economic growth, there existed a long-run causal relationship between money supply growth and inflation.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 10 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.