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Exchange Rate and Indonesia Economic Growth

Author

Listed:
  • Ayi Supriyadi

    (Bank Indonesia, Indonesia)

  • Trinil Arimurti

    (Bank Indonesia, Indonesia)

  • Yanfitri

    (Bank Indonesia, Indonesia)

  • Sinta Atharinanda

    (Bank Indonesia, Indonesia)

Abstract

We examine the effect of the exchange rate on the economy and the impact of the Dominant Currency Paradigm (DCP) on Indonesia’s export volume. This study employs multiple methodologies, namely the AutoRegressive Distributed Lag (ARDL) model, the non-linear version of ARDL, and panel regressions. The findings indicated that the depreciation of the exchange rate influenced economic expansion. The beneficial effect was mitigated by the influence of finance as seen in the company’s financial sheet. The findings also indicate the influence of DCP on the volume of international trade in Indonesia.

Suggested Citation

  • Ayi Supriyadi & Trinil Arimurti & Yanfitri & Sinta Atharinanda, 2025. "Exchange Rate and Indonesia Economic Growth," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 28(2), pages 261-292, July.
    • Handle: RePEc:idn:journl:v:28:y:2025:i:2e:p:261-292
    DOI: https://doi.org/10.59091/2460-9196.1932
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    References listed on IDEAS

    as
    1. Hoyt Bleakley & Kevin Cowan, 2008. "Corporate Dollar Debt and Depreciations: Much Ado About Nothing?," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 612-626, November.
    2. Gita Gopinath & Emine Boz & Camila Casas & Federico J. Díez & Pierre-Olivier Gourinchas & Mikkel Plagborg-Møller, 2020. "Dominant Currency Paradigm," American Economic Review, American Economic Association, vol. 110(3), pages 677-719, March.
    3. Camila Casas & Mr. Federico J Diez & Ms. Gita Gopinath & Pierre-Olivier Gourinchas, 2017. "Dominant Currency Paradigm: A New Model for Small Open Economies," IMF Working Papers 2017/264, International Monetary Fund.
    4. Bahmani-Oskooee, Mohsen & Aftab, Muhammad & Harvey, Hanafiah, 2016. "Asymmetry cointegration and the J-curve: New evidence from Malaysia-Singapore commodity trade," The Journal of Economic Asymmetries, Elsevier, vol. 14(PB), pages 211-226.
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    Cited by:

    1. Franz Seitz & Joerg Flemmig, 2025. "A Note on Keynesian Models Used in Standard Textbooks," Economies, MDPI, vol. 13(10), pages 1-13, September.

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    Keywords

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    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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