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Explaining chronic inflation in Indonesia


  • Ross McLeod


This paper describes and analyses Indonesia's frustrating experience with chronic inflation, and demonstrates that the cause of continuing moderately high inflation is excessive growth of base money. It examines the central bank's current target growth rates for narrow and broad money and bank lending, and argues instead in favour of a single target rate for base money as the key to bringing inflation under control.

Suggested Citation

  • Ross McLeod, 1997. "Explaining chronic inflation in Indonesia," Journal of Development Studies, Taylor & Francis Journals, vol. 33(3), pages 392-410.
  • Handle: RePEc:taf:jdevst:v:33:y:1997:i:3:p:392-410
    DOI: 10.1080/00220389708422471

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    Cited by:

    1. Tubagus Feridhanusetyawan, 1997. "Survey of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 33(2), pages 3-39.
    2. Siregar, Reza & Rajaguru, Gulasekaran, 2005. "Sources of variations between the inflation rates of Korea, Thailand and Indonesia during the post-1997 crisis," Journal of Policy Modeling, Elsevier, vol. 27(7), pages 867-884, October.
    3. Reza Anglingkusumo, 2005. "Money - Inflation Nexus in Indonesia: Evidence from a P-Star Analysis," Tinbergen Institute Discussion Papers 05-054/4, Tinbergen Institute.
    4. Arief Ramayandi, 2001. "Optimum Monetary Instrument Option in the Case of a Small Open Economy," Working Papers in Economics and Development Studies (WoPEDS) 200101, Department of Economics, Padjadjaran University, revised Sep 2001.
    5. Ross McLeod, 1997. "Survey of Recent Developments," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 33(1), pages 3-43.
    6. Stephen Grenville, 2000. "Monetary Policy and the Exchange Rate During the Crisis," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 36(2), pages 43-60.

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