IDEAS home Printed from https://ideas.repec.org/a/icf/icfjae/v07y2008i6p7-28.html
   My bibliography  Save this article

Currency Crisis, Inflation and Stability of Demand for Broad Money: The Case of Indonesia

Author

Listed:
  • Boaz Nandwa
  • Ramesh Mohan

Abstract

: In the aftermath of the Asian financial crisis, there was widespread concern among the Asian economies that this could potentially have resulted in persistent inflation with volatile money demand in the region. By employing multivariate cointegration methodology, this paper examines the implication of currency crisis on inflation and structural stability of demand for broad money in Indonesia. Recursive estimation and diagnostic tests were implemented to check parameter constancy across regime changes over the period 1991-2004 . The results indicate that controlling for structural breaks (except for 1997 and 1998) the demand for real broad money remained stable in the aftermath of the currency crisis in Indonesia. Further, the study finds evidence that changes in broad money, exchange rate depreciation, and interest rates have a significant impact on inflation inertia in Indonesia, both before and after the currency crisis.

Suggested Citation

  • Boaz Nandwa & Ramesh Mohan, 2008. "Currency Crisis, Inflation and Stability of Demand for Broad Money: The Case of Indonesia," The IUP Journal of Applied Economics, IUP Publications, vol. 0(6), pages 7-28, November.
    • Handle: RePEc:icf:icfjae:v:07:y:2008:i:6:p:7-28
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    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:icf:icfjae:v:07:y:2008:i:6:p:7-28. 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: G R K Murty (email available below). General contact details of provider: .

    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.