INFLASI DINAMIK DI INDONESIA: MODEL HYBRID NEW KEYNESIAN PHILLIPS CURVE DALAM PERSPEKTIF DATA PANEL PROVINSI

• Main Authors: , CHANDRA UTAMA, , Prof. Dr. Insukindro, M.A.
• Format: Theses and Dissertations NonPeerReviewed
• Published: [Yogyakarta] : Universitas Gadjah Mada 2014
• Subjects: ETD
• Online Access: https://repository.ugm.ac.id/128765/; http://etd.ugm.ac.id/index.php?mod=penelitian_detail&sub=PenelitianDetail&act=view&typ=html&buku_id=69131
• Institution: Universitas Gadjah Mada

High inflation is one of major economic problems and must be controlled. Therefore it is essential to understand inflation dynamics in Indonesia. The previous studies are generally analyze inflation dynamics using national data, while this research uses the provincial panel data. National data have weakneses because it tends to be dominated provinces in Java, while the provincial panel data represent whole region or provinces in Indonesia. This study uses quarterly data covering the period 2005.III-2013.III. The empirical results-estimated using Generalized Method of Moment (GMM)-show that the expectation of inflation in provinces is formed from backward looking and forward looking behavior as forward looking is dominant behavior. Furthermore, the study find low inflation persistence in provinces then the price is adjusted rapidly. In addition, other variables that influence inflation are output gap and the change of money in provinces. On the other hand, the cyclical variabel, Eid (Islamic religious holidays) also cause inflation rise. The domintion of forward-looking behavior suggests that economic agents respond to the future information and credible policy quickly. In addition, the low inflation persistence also indicates that economic agents do not delay the inflation adjustment. This condition allows the effective inflation target policy. Furthermore, positive output gap causes hight inflation and negative output gap causes low inflation. This results implies the importance of understanding on which stage the provincial economy. In addition, the provinces economy requires policies to manage demand.Furthermore, the high increase of money led high inflation and low increase or decrease of money led low inflation. The result imply that inflation in the region can be controlled using the money supply. The estimation of inflation dinamic also show that the Eid (islamic religious holiday) lead to higher inflation so the policies that offset the price increase when Eid are essential.