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Towards Implementation Of Inflation Targeting In Indonesia

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Author Info
Halim Alamsyah, Charles Joseph, Juda Agung, Doddy Zulverdy
Abstract

The experience of high inflation accompanying the economic crisis in 1998 has brought back painful memories of hyperinflation in the 1960s. Success with inflation targeting (IT) in other countries has prompted Indonesia to consider this framework as the basis for monetary policy,a response that seems justified on at least two grounds. First, monetary policy needs a new anchor after the abandonment in 1997 of the previous regime of managed floating. Second, the central bank law enacted in 1999 prescribes stability of the value of the rupiah as Bank Indonesia's sole objective. This paper explores the future framework of monetary policy under a formal IT approach and highlights the constraints Bank Indonesia faces in implementing such an approach. It discusses the monetary policy framework before and during the crisis, and in the post-crisis period. It then goes on to outline a preliminary design for a suitable IT framework for Indonesia.

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Article provided by Taylor and Francis Journals in its journal Bulletin of Indonesian Economic Studies.

Volume (Year): 37 (2001)
Issue (Month): 3 (December)
Pages: 309-324
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Handle: RePEc:taf:bindes:v:37:y:2001:i:3:p:309-324

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Stephen G. Cecchetti & Michael Ehrmann, 1999. "Does Inflation Targeting Increase Output Volatility? An International Comparison of Policymakers' Preferences and Outcomes," NBER Working Papers 7426, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Debelle, Guy & Masson, Paul & Savastano, Miguel & Sharma, Sunil, . "Inflation Targeting as a Framework for Monetary Policy," IMF Economic Issues 15, International Monetary Fund. [Downloadable!]
  3. Stephen Grenville, 2000. "Monetary Policy and the Exchange Rate During the Crisis," Bulletin of Indonesian Economic Studies, Taylor and Francis Journals, vol. 36(2), pages 43-60, August. [Downloadable!] (restricted)
  4. Oscar Landerretche & Vittorio Corbo & Klaus Schmidt-Hebbel, 2001. "Does Inflation Targeting Make a Difference," Working Papers Central Bank of Chile 106, Central Bank of Chile. [Downloadable!]
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  5. Norman Loayza & Raimundo Soto, 2001. "Ten Years of Inflation Targeting: Design, Performance, Challenges," Working Papers Central Bank of Chile 131, Central Bank of Chile. [Downloadable!]
  6. Frederic S. Mishkin & Klaus Schmidt-Hebbel, 2001. "One decade of inflation targeting in the world : What do we know and what do we need to know?," Working Papers Central Bank of Chile 101, Central Bank of Chile. [Downloadable!]
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  7. Aaron Drew & Benjamin Hunt, 1999. "Efficient simple policy rules and the implications of potential output uncertainty," Reserve Bank of New Zealand Discussion Paper Series G99/5, Reserve Bank of New Zealand. [Downloadable!]
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  8. Nicoletta Batini & Andrew G Haldane, . "Forward-looking rules for monetary policy," Bank of England working papers 91, Bank of England. [Downloadable!]
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  9. Guy Debelle, 1997. "Inflation Targeting in Practice," IMF Working Papers 97/35, International Monetary Fund.
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ross McLeod, 2002. "Toward Improved Monetary Policy in Indonesia," Departmental Working Papers 2002-10, Australian National University, Economics RSPAS. [Downloadable!]
  2. Paul R. Deuster, 2002. "Survey Of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor and Francis Journals, vol. 38(1), pages 5-37, April. [Downloadable!] (restricted)
  3. Ari Kuncoro & Budy Resosudarmo, 2006. "Survey of recent developments," Bulletin of Indonesian Economic Studies, Taylor and Francis Journals, vol. 42(1), pages 7-31, January. [Downloadable!] (restricted)
    Other versions:
  4. Ross H. McLeod, 2004. "Towards Improved Monetary Policy in Indonesia: Response to De Brouwer," Departmental Working Papers 2004-01, Australian National University, Economics RSPAS. [Downloadable!]
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