The Analysis of Monetary Policy Transmission Mechanism by Exchange Rate Channel in Influencing The Inflation in Indonesia
Putry Sari Rahmadyah Pulungan, Fitrawaty, Sri Fajar Ayu

State University of Medan

Abstract

This study are aims to find out the effectiveness of monetary policy transmission on exchange rate passthrough in Indonesia for period 2004.1-2018.4. The variables consist of this sudy such as exchange rate, net exports, difference of BI rate and the fed rate, foreign exchange reserves and inflation. This study use secondary data through Bank Indonesia office and The Federal Reserve which analyzed by Vector Error Correction Model (VECM) and eviews 10 program. The result during the period of this study shows that transmission direct exchange rate passthrough is more effective to affect the inflation. While transmission indirect exchange rate passthrough is less effective to affect the inflation which reflects the price stability as the ultimate objective of monetary policy in Indonesia.

Keywords: Exchange Rate; Net Exports; Difference of BI Rate and The Fed Rate; Foreign Exchange

Topic: Economics, Business and Management Education

Link: https://ifory.id/abstract-plain/ghJPARqkLDvn

Web Format | Corresponding Author (Putry Sari Rahmadyah Pulungan)