Towards improved monetary policy in Indonesia
Indonesia's depreciation vastly exceeded that of all other countries hit by the Asian crisis. Indonesia also experienced far higher inflation. This paper argues that there is a close medium to long-term relationship between money growth and inflation in Indonesia, and that this has not been greatly disturbed by the crisis. It argues that the country's disappointing performance in relation to maintaining the value of the rupiah can be explained by the central bank's failure to sterilise the monetary impact on base money of its last-resort lending to the banks. The fundamental lesson is that Bank Indonesia would be well advised to adopt slow and steady growth of base money as the nominal anchor for monetary policy, now that the pre-crisis policy of slow and steady depreciation of the rupiah has been abandoned.
Volume (Year): 39 (2003)
Issue (Month): 3 ()
|Contact details of provider:|| Web page: http://www.tandfonline.com/CBIE20|
|Order Information:||Web: http://www.tandfonline.com/pricing/journal/CBIE20|
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.:
- Halim Alamsyah & Charles Joseph & Juda Agung & Doddy Zulverdy, 2001. "Towards Implementation Of Inflation Targeting In Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 37(3), pages 309-324.
- J. Soedradjad Djiwandono, 2000. "Bank Indonesia and The Recent Crisis," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 36(1), pages 47-72.
- Ross McLeod, 1999. "Crisis-Driven Changes to the Banking Laws and Regulations," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 35(2), pages 147-154.
- Hadi Soesastro & M. Chatib Basri, 1998. "Survey of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 34(1), pages 3-54.
- Paul Deuster, 2002. "Survey Of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 38(1), pages 5-37.
- Hadi Soesastro & Raymond Atje, 2005. "Survey of recent developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 41(1), pages 5-34.
When requesting a correction, please mention this item's handle: RePEc:taf:bindes:v:39:y:2003:i:3:p:303-324. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)
If references are entirely missing, you can add them using this form.