Does Money Matter in Indonesia? Revisiting Divisia Money

• Main Authors: Puah, Chin Hong, Jean, Maggie Tang May, Shazali, Bin Abu Mansor, Brahmana, Rayenda Khresna
• Format: E-Article
• Language: English
• Published: Academic Journals 2015
• Subjects: HG Finance
• Online Access: http://ir.unimas.my/id/eprint/27413/1/Does%20Money%20Matter%20in%20Indonesia%20-%20Copy.pdf; http://ir.unimas.my/id/eprint/27413/; https://academicjournals.org/journal/JEIF#
• Institution: Universiti Malaysia Sarawak

In this study, we applied an ARIMA model of a long-run monetary neutrality test proposed by Fisher and Seater (1993) to empirically examine the monetary neutrality proposition in Indonesia using different definition of monetary aggregates for the period of 1981:Q1 to 2011:Q4. Both monetary aggregates (simple-sum money and Divisia money) are found to be non-neutral, indicating that Divisia money can be considered to be used as a monetary policy variable in Indonesia.