Base Money and Exchange Rate: Sources of Inflation in Indonesia during the Post-1997 Financial Crisis
The magnitude of the rise in inflation rate in Indonesia during the height of the 1997 financial crisis was among the sharpest that the East Asian economies has ever witnessed in the recent decades. This paper empirically tests the monetary hypotheses of inflation and compares and contrasts the sources of price changes during the pre- and post-1997 financial crisis. We find a high explanatory power of the monetary model for the post-crisis period, but not for the pre-crisis. The high volatilities of the local currency and the unprecedented rapid growth rate of base money during the post-crisis are found to be the two key monetary determinants of the inflation in the country.
|Date of creation:||Aug 2002|
|Contact details of provider:|| Postal: Adelaide SA 5005|
Phone: (+ 61 8) 8303 5672
Fax: (+ 61 8) 8223 1460
Web page: http://www.adelaide.edu.au/cies/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:adl:cieswp:2002-21. 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: (Dmitriy Kvasov)
If references are entirely missing, you can add them using this form.