IDEAS home Printed from https://ideas.repec.org/a/eco/journ2/v15y2025i6id20873.html

Climate Change and Monetary Policy in Indonesia: Evidence from Asymmetric Time Varying Granger Causality

Author

Listed:
  • Khaliq, Abdul

    (Department of Economics, Universitas Andalas, West Sumatra, Indonesia)

  • Karimi, Syafruddin

    (Department of Economics, Universitas Andalas, West Sumatra, Indonesia)

  • Taifur, Werry Darta

    (Department of Economics, Universitas Andalas, West Sumatra, Indonesia)

  • Ridwan, Endrizal

    (Department of Economics, Universitas Andalas, West Sumatra, Indonesia)

Abstract

This study examines the asymmetric time-varying climate change shocks on monetary policy in Indonesia over the period January 1990 to March 2025. Performing a recent novel asymmetric time-varying Granger causality (AS-TVGC) technique, we capture the asymmetric climate change leading to monetary policy proxied by M0, M1, M2, and BI policy rate significantly. Empirical findings reveal that date stamping of climate change to monetary policy from TVGC estimations. In addition, the AS-TVGC profoundly exposes how the monetary policy responds to both positive and negative climate change shocks significantly. Specifically, we reveal that the monetary policy responds variously to climate change-positive, but persistently to climate change-negative. Consequently, in addition to addressing the exposure of asymmetric causal climate change to monetary policy, the central bank policy makers should take the mandate to design new climate-based monetary operations to set price stability and sustainable growth in the net-zero central banking framework.

Suggested Citation

  • Khaliq, Abdul & Karimi, Syafruddin & Taifur, Werry Darta & Ridwan, Endrizal, 2025. "Climate Change and Monetary Policy in Indonesia: Evidence from Asymmetric Time Varying Granger Causality," International Journal of Energy Economics and Policy, Econjournals, vol. 15(6), pages 183-194, October.
    • Handle: RePEc:eco:journ2:v:15:y:2025:i:6:id:20873
    DOI: 10.32479/ijeep.20873
    as

    Download full text from publisher

    File URL: https://econjournals.com/index.php/ijeep/article/download/20873/9342
    Download Restriction: no
    File URL: https://libkey.io/10.32479/ijeep.20873?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ2:v:15:y:2025:i:6:id:20873. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Monica Sinhat (email available below). General contact details of provider: https://econjournals.com/index.php/ijeep .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.