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Determinants Of Inflation In Indonesia: Dynamics Over A Decade

Author

Listed:
  • Donni Fajar Anugrah

    (Bank Indonesia)

  • Retno Muhardini

    (Bank Indonesia)

  • Wahyoe Soedarmono

    (Sampoerna University)

  • Zaki Intan Cindyagita

    (Bank Indonesia)

Abstract

Inflation is a crucial topic that has been extensively researched by academics and government authorities, including central banks as monetary authorities. Maintaining inflation at a stable and low level is a fundamental basis for improving the well-being of the population and sustaining economic growth. This research aims to conduct a comprehensive literature review of Bank Indonesia's internal research and studies on inflation, with the objective of identifying research gaps to recommend future research directions. Through a literature survey method, 149 research outcomes/internal studies published by Bank Indonesia from 1965 to 2022 in the Bank Indonesia's internal repository were collected and reviewed. Findings from this literature study provide a complex overview of the factors influencing inflation and the policies required to achieve sustainable price stability in Indonesia. The review in this study encompasses inflation from basic theory, spatial aspects, inflation disaggregation, medium-run price formation, Phillips Curve theory, and various other empirical analyses. Differences in inflation literature findings between the preInflation Targeting Framework (ITF) and post-ITF periods are also discussed. Several recommendations are proposed, including suggestions for research that support intensified multidisciplinary studies and a deeper understanding of inflation.

Suggested Citation

  • Donni Fajar Anugrah & Retno Muhardini & Wahyoe Soedarmono & Zaki Intan Cindyagita, 2023. "Determinants Of Inflation In Indonesia: Dynamics Over A Decade," Working Papers WP/09/2023, Bank Indonesia.
    • Handle: RePEc:idn:wpaper:wp092023
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    References listed on IDEAS

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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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