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Explaining regional inflation programmes in Indonesia: Does inflation rate converge?

Author

Listed:
  • Rudi Purwono

    (Universitas Airlangga)

  • Mohammad Zeqi Yasin

    (Universitas Airlangga)

  • M. Khoerul Mubin

    (Universitas Airlangga)

Abstract

This paper investigates the inflation convergence of 82 Indonesian cities and discusses the remarkable regional inflation programmes in Indonesia. By employing a dynamic panel regression, the paper shows that Indonesia experienced an inflation convergence from 2013 to 2018. An intriguing finding is that the cities in Java-Bali, the largest density area, experienced a slower speed of convergence than that in cities outside the Java-Bali. This paper alleges that the development of logistic transportation and the formulation of an inflation control programme, such as the Tim Pengendalian Inflasi Daerah (TPID) or Regional Inflation Controlling Team (RICT) that has just been stationed and has commenced their duties in East Indonesia, might play an essential role in the convergence. Moreover, the coordination between the central and regional governments, represented by TPID/RICT, in implementing the effective policy (i.e. prioritising development outside Java-Bali and fostering inter-region cooperation in the commodity supply chain) is effective in stabilising and reducing the inflation rate.

Suggested Citation

  • Rudi Purwono & Mohammad Zeqi Yasin & M. Khoerul Mubin, 2020. "Explaining regional inflation programmes in Indonesia: Does inflation rate converge?," Economic Change and Restructuring, Springer, vol. 53(4), pages 571-590, November.
    • Handle: RePEc:kap:ecopln:v:53:y:2020:i:4:d:10.1007_s10644-020-09264-x
    DOI: 10.1007/s10644-020-09264-x
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Harry Aginta & Masakazu Someya, 2022. "Regional economic structure and heterogeneous effects of monetary policy: evidence from Indonesian provinces," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 11(1), pages 1-25, December.
    2. Dawber James & Smith Paul A. & Tzavidis Nikos & Würz Nora & Flower Tanya & Thomas Heledd & Schmid Timo, 2022. "Experimental UK Regional Consumer Price Inflation with Model-Based Expenditure Weights," Journal of Official Statistics, Sciendo, vol. 38(1), pages 213-237, March.
    3. Rudi Purwono (a) and Mohammad Zeqi Yasin (b), 2020. "Does Efficiency Convergence of Economy Promote Total Factor Productivity? A Case of Indonesia," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 45(4), pages 69-91, December.
    4. Serhan Cevik, 2023. "Mind the gap: city-level inflation synchronization," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 70(1), pages 121-139, March.
    5. Harry Aginta, 2022. "Spatiotemporal analysis of regional inflation in an emerging country: The case of Indonesia," Regional Science Policy & Practice, Wiley Blackwell, vol. 14(3), pages 667-688, June.
    6. Harry Aginta, 2021. "Spatial dynamics of consumer price in Indonesia: convergence clubs and conditioning factors," Asia-Pacific Journal of Regional Science, Springer, vol. 5(2), pages 427-451, June.

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    More about this item

    Keywords

    Inflation; Convergence; Regional policy; Tim Pengendalian Inflasi Daerah (TPID);
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E69 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Other
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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