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Impact Of Redenomination On Price, Volume, And Value Of Transaction: An Experimental Economic Approach

Author

Listed:
  • Danti Astrini

    (IPB)

  • Bambang Juanda

    (IPB)

  • Noer Azam Achsani

    (IPB)

Abstract

Redenomination is a simplification of nominal value of currency by reducing digit (zero number) without reducing the real value of the currency. This paper provide an overdownload of the impact of redenomination to changes in transaction prices, transaction value and number of transactions using experimental methods. The results showed that the most substantial price reduction on the elastic goods can occur in conditions of low economic growth and high inflation. Price reductions also occur in conditions of high economic growth and low inflation. Based on results, there is no change between before and after redenomination on the number of transactions. So redenomination would not change the number of transactions in elastic goods. Conditions which can change the value of the transaction is low growth and high growth in high inflation condition. Conditions of high inflation and low growth will decrease the value of the transaction while the condition of high inflation with high growth will increase the value of the transaction.

Suggested Citation

  • Danti Astrini & Bambang Juanda & Noer Azam Achsani, 2016. "Impact Of Redenomination On Price, Volume, And Value Of Transaction: An Experimental Economic Approach," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 19(2), pages 1-32, October.
    • Handle: RePEc:idn:journl:v:19:y:2016:i:2:p:1-32
    DOI: https://doi.org/10.21098/bemp.v19i2.630
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    More about this item

    Keywords

    Redenomination; Inflation; Economic Growth; Experiment;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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