bluuebunny/crossref_metadata_2025 huggingface dataset:
DO REGIONAL TRADE AREAS IMPROVE EXPORT COMPETITIVENESS? - A CASE OF INDONESIA
Authors: Widyasanti Amalia Adininggar
Published: January 2017

Indonesia has involved in quite many regional trade agreements, since more than a decade ago. Theoritically, Free Trade Agreements (FTAs) are very beneficial to the countries, as resources are more efficiently allocated due to production specialization. However, presence of asymmetric information, market inefficiency, and economic distortion in the real world have led to a deviation of FTAs benefits from its theoritical framework. This paper studies whether Indonesian export competitiveness is improving after Indonesia involves in ASEAN Free Trade Agreement (AFTA) and ASEAN-Cina Free Trade Agreement (ACFTA). Export competitiveness are measured by some trade indicators, such as: trade intensity index, market share, export product dynamics, and RCA, for some Indonesian main export products. The indices are compared across ASEAN countries and Cina to reveal: (i) which products are gaining or losingcompetitiveness in ASEAN and Cina markets; and (ii) which countries are  becoming Indonesian main competitors in ASEAN and Cina markets. Additionally, this paper ends up with some policy recommendations that Indonesia should undertake to improve competitiveness of its products in ASEAN and Cina markets.JEL Classification: R11, F16Keywords: FTA, export competitiveness, Indonesia
IS ACFTA A PROPER STRATEGY OF SUSTAINABLE POVERTY ALLEVIATION?: PROOF FROM THE DEPLETION OF SAVING RATE
Authors: Wirapati Bagus Arya , Kusumawardhani Niken Astria Sakina
Published: January 2017

The outcome of Regional Free Trade Area (R-FTA) still remains a conundrum. Regional free trade area (R-FTA) is one of the manifestations of the economy integration phenomenon. R-FTA brings many pros and cons to the economists. It allows better allocation of resources especially by eliminating tariffs, thus making people have higher purchasing power for goods. While the increase of purchasing power is good for growth engine and poverty alleviation progress, this paper proves that there is potency for the agreement to be detrimental in the long run.The main focus in this paper is the potential impact of ACFTA to the saving rate as the shock buffer for the poor in time of recessions and crises, where purchasing power decreases significantly. We view the ACFTA impact through the series of net import, defined as the difference between imports from export. We use Dynamic Panel Data (DPD) to estimate the impact of net import to the saving rate, assuming that there is a dynamic relationship between saving rate and its lagged value. The estimation result proves that there is a negative relationship between import and the saving per capita, which indicates the consumptive behavior of ASEAN people under high import. Moreover, the dynamic relationship shows that saving per capita is not persistent, meaning that the saving rate will be decreased gradually.Therefore, we can expect that in the long rung, the savings will be depleted into nothing if we keep letting the import flooded domestic market without imposing any pre-emptive and reactive policies. This paper provides a set of historical estimation of the potential impact of ACFTA on saving rate and its policy implication to endure the impact.JEL Classification Code: E38, F15Keywords: Free Trade, Poverty Alleviation, Saving Behavior
MAKING EAST ASIAN REGIONALISM WORKS
Authors: Hastiadi Fithra Faisal
Published: January 2017

For the past few years, regionalism has been progressing in East Asia with the likes of Cina, Japan, and Korea (CJK) as the most prominent actors. Unfortunately, with the absence of trade arrangement amongst the CJK, the present regional trade scheme is not sufficient to reach sustainability. This paper uncovers the inefficient scheme through Engle-Granger Cointegration and Error Correction Mechanism. Moreover, the paper underlines the importance of triangular trade agreement for accelerating the phase of growth in CJK which eventually create a spillover effect to East Asia as a whole. Employing Two Stage Least Squares in a static panel fixed effect model, the paper argues that the spillover effect will function as an impetus for creating region-wide FTA. Furthermore, the paper also identifies a number of economic and political factors that can support the formation of East Asian Regionalism.JEL Classification: F15, C13, C22, C33Keywords: Regionalism, Engle-Granger Cointegration, Error Correction Mechanism, Fixed Effect, Two Stage Least Squares
QUARTERLY ANALYSIS: The Progress of Monetary, Banking and Payment System Third Quarter – 2010
Authors: Bank Indonesia Author Team of Quarterly Report
Published: January 2017

The acceleration of economic growth in Indonesia was still continuing and the macroeconomic stability was maintained. Accelerating economic growth was driven by the increased consumption and exports and investment. Consumption was increased by the optimism sparked by consumer confidence, availability of consumption financing and low import prices. Meanwhile, the improved export activity that remained improving was resulted from the strong demands mainly from China and India. The increasing domestic and international demand has resulted in increased investment growth. The Indonesian economy in 2010 was estimated to grow 6.0% -6.3% and in 2011 to reach 6.0% -6.5% range.
THE DYNAMICS OF MANUFACTURING INDUSTRY AND THE RESPONSE TOWARD BUSINESS CYCLE
Authors: Kurniati Yati , Yanfitri Yanfitri
Published: January 2017

The role of the manufacturing industry in the economy has expanded significantly from 19 percent in 1990 to 26 percent in 2009, while its labor absorption only increased from 10 percent to 12.2 percent. The cycle of the manufacturing industry has been in line with the economic growth. This study explores the implications of the firm-level heterogeneity over the business cycle. By using the panel multinomial logit, it shows that firms with less capital and small size have greater probability to exit the industry during the boom/ bust period. Sensitivity of the company to changes in capital is greater during the boom period. Only highly productive firms enter and begin production during recessions. Companies with higher productivity rate also have greater probability to enter the market. In contrast, higher production cost and higher market concentration increase the probability for smaller companies to exit from the industry.JEL Classification:  : D24, L6, E32Keywords: Production, Cost, Capital and Total Factor Productivity, Industry Studies Manufacturing, Business Fluctuations/cycles
THE ROLE OF FISCAL STIMULUS AND MONETARY EASING IN INDONESIAN ECONOMY DURING GLOBAL FINANCIAL CRISIS: FINANCIAL COMPUTABLE GENERAL EQUILIBRIUM APPROACH
Authors: Simorangkir Iskandar , Adamanti Justina
Published: January 2017

Global financial crisis started in mid 2008 has reduced global economic growth, and many countries even experienced economic contraction. To deal with economic contraction, various economic policies have been undertaken. Governments have increased fiscal stimulus through increasing expenditure and lowering tax while central banks have cut policy rates substantially. In some countries interest rates even reach zero or close to zero. Similar to many other countries, Indonesia has also undertaken expansionary policies, namely increasing fiscal stimulus and lowering interest rates.This paper examines the impacts of fiscal stimulus and interest rate cut on Indonesian economy using financial computable general equilibrium (FCGE) approach. The estimation results show a number of findings. First, the combination of fiscal expansion and monetary expansion boosts economic growth of Indonesia effectively. Relative to the effectiveness of fiscal expansion without monetary policy expansion or monetary expansion without fiscal expansion, the combination of those two policies is more effective.Second, looking into the components of GDP, the combination of fiscal and monetary expansion has a large multiplier effect, boosting aggregate demand through increasing consumption, investment, government expenditure, exports and imports. Meanwhile, from production side, the combination of fiscal and monetary expansion has positive effects on increasing production of all economic sectors. This effect comes from fiscal incentive (lower tax, lower import duties, etc) in increasing investment. Moreover, the increase in aggregate demand also encourages enterprises to increase their production.Third, institutionally fiscal stimulus and monetary easing has increased income and purchasing power of the poor and rich households in rural and urban area. This increase in turn results in higher all household consumption.JEL Classification: D58, E12, E13, E52, E58, H25, H31, H53, H54Keywords: Fiscal stimulus, monetary easing, financial computable general equilibrium, global financial crisis.
BANKING CRIME ANALYSIS AND THE EFFECTIVENESS OF BANKING SUPERVISION: COMBINING GAME THEORY AND THE ANALYTICAL NETWORK PROCESS APPROACH
Authors: Abdullah Piter
Published: January 2017

A failed bank can spark a deep financial crisis throughout the whole country when ironically it may simply have been triggered by a banking crime perpetrated by an insider, i.e. the banker. Although banking crimes may pose a significant threat to financial sector stability, the potential risk of internal fraud has, hitherto, not been taken into account in banking supervision processes. This paper analyzes the effectiveness of banking supervision to uncover potential risks of banking crimes by combining game theory and the analytical network process approach. In this paper, the author conducts two games with three players; the banker, the bank supervisor and the police. The banker has two strategies: to offend or not to offend. The bank supervisor has two choices: to supervise or not to supervise. The police can choose to enforce or not to enforce. In the first part, the effectiveness of bank supervision is analyzed theoretically using game theory. The effectiveness of banking supervision will depend on the behavior of each player as reflected in their decisions. Further analysis will confirm the previous result using an analytical network process. At this stage, the analytical network process is used to calculate the probability of each strategy being chosen by considering all criteria or sub criteria. Any decision made by one player will influence the other players in choosing their alternative strategies and vice versa.JEL Classificiation: C78, E58Keywords: Analytical Network Process, banking crimes, game theory
ANALISIS TRIWULANAN: Perkembangan Moneter, Perbankan dan Sistem Pembayaran, Triwulan IV – 2010
Authors: Bank Indonesia Tim Penulis Laporan Triwulanan
Published: January 2017

Perekonomian Indonesia di tahun 2010 menunjukkan akselerasi pertumbuhan yang cukup tinggi di tengah ketidakseimbangan pemulihan ekonomi global. Perekonomian domestik diprakirakan dapat tumbuh 6,1% pada triwulan IV-2010 sehingga untuk keseluruhan tahun 2010 perekonomian nasional dapat tumbuh sekitar 6%. Untuk tahun 2011 dan 2012, Bank Indonesia optimis bahwa pemulihan ekonomi domestik akan semakin kuat ditopang oleh peningkatan permintaan domestik dengan kinerja investasi yang semakin baik. Perekonomian Indonesia di tahun 2011 diprakirakan tumbuh mencapai kisaran 6,0-6,5% dan pada tahun 2012 menjadi 6,1-6,6%.
INFLATION TARGETING UNDER IMPERFECT CREDIBILITY BASED ON ARIMBI (Aggregate Rational Inflation - Targeting Model for Bank Indonesia); LESSONS FROM INDONESIAN EXPERIENCE
Authors: Harmanta Harmanta , Bathaluddin M. Barik , Waluyo Jati
Published: January 2017

This paper try to assess role of credibility in the implementation of inflation targeting framework in Indonesia. It illustrates how credibility may play an important role in the evolution of the Indonesian monetary policy. Knowing the degree of credibility would beneficial for Bank Indonesia (BI) to understand how to adjust policy instrument to achieve a long-term inflation target.Scaled from zero (purely not credible) to one (perfect credibility), our quantitative measurements found that credibility index for Indonesian monetary policy converge to around 0.5. Refer to projection and simulation results in this paper, the study shows expectation inflation of economic agents is strongly influenced by monetary policy credibility. The more credible the monetary policy, the faster inflation expectation would anchor to its target. In addition, high credibility also increase the efficiency of the monetary policy transmission since the disinflation cost represented by sacrifice ratio is lower. Under imperfect credibility the central bank prefer to attain its inflation target gradually, and if the credibility stock is doubled, then achieving its long-term inflation target required a lot shorter time (approximately 0.4 periods than the baseline).JEL Classification: E31, E52, E58, E61Keywords: Disinflation, Monetary Policy, Imperfect Credibility, Sacrifice Ratio
ANALISIS PERILAKU INDIKATOR DEBT MARKET
Authors: Jacobs P Peter , Abubakar Arlyana , Siallagan Tora Erita
Published: January 2017

This paper analyze the debt market, focusing on the behavior of soverign yield and Credit Default Swap (CDS). We build several empirical models to test the factors determine these two indicators and apply them using the Indonesian and peers data. The result confirm the significance impact of foreign reserves and VIX index on the bond yield in Indonesia and its peers country. On the composite sovereign bond, the result shows that the real effective exchange rate (REER) and the debt service ratio (DSR) significantly affect the yield, while on the corporate bond yield, the significant explanatory variables are return on equity (ROE), inflation, the current ratio (CR) and net profit margin (NPM). However, there is an anomaly where the impact of the last two variables (CR and NPM) are contrary to the theory.Keyword: Sovereign, bond, yield, debt market, risk, corporate fundamentals.JEL Classification: H63, G31
DAMPAK DEPRESIASI NILAI TUKAR DAN PERTUMBUHAN UANG BEREDAR TERHADAP INFLASI: APLIKASI THRESHOLD MODEL
Authors: Wimanda Rizki E.
Published: January 2017

This paper investigates the impact of exchange rate depreciation and money growth to the CPI inflation in Indonesia. Using monthly data from 1980:1 to 2008:12, our econometric evidence shows that there are indeed threshold effects of money growth on inflation, but no threshold effectof exchange rate depreciation on inflation. Even though the threshold value for exchange rate depreciation is found at 8.4%, the F-test suggests that there is no significant difference between the coefficient below and that above the threshold value. While, two threshold values are found for money growth, i.e. 7.1% and 9.8%, and they are statistically different. The impact on inflation is high when money grows by up to 7.1%, it is moderate when money grows by 7.1% to 9.8%, and it is low when money grows by above 9.8%.JEL Classification: C22; E31; E51.Keywords: Inflation, Threshold Effect; Indonesia
MONETARY TRANSMISSION OF PERSISTENT SHOCK TO THE RISK PREMIUM: THE CASE OF INDONESIA
Authors: Hutabarat Akhis R.
Published: January 2017

This paper investigates the relative importance of monetary transmission channel to inflation of passing persistent shock to the risk premium. The findings show that nominal exchange rate depreciation, triggered by a more persistent shock to interest risk premium, worsens the state of the economy in the short- and long-run. Such distinctive shocks effect is transmitted through the economy that typifies lack of response of consumer price disinflation to interest rate tightening caused by high real rigidity, strong cost channel of interest rate, strong cost channel of exchange rate pass-through and weak demand-side channel of exchange rate pass-through. This study suggests a proper monetary policy response, which is the smallest interest rate increases within the feasible set of monetary policy responses that the model recommends, to minimize the adverse effects of the shocks.Keywords: Exchange rate, Balance of Payment, Monetary transmission and policy, Dynamic General Equilibrium.JEL Classification: F41; E52; D58
ANALISIS DAMPAK KEBIJAKAN MAKROEKONOMI TERHADAP PERKEMBANGAN INDUSTRI TEKSTIL DAN PRODUK TEKSTIL INDONESIA
Authors: Hermawan Iwan
Published: January 2017

Textile and textile’s product play an important role in the Indonesian economy. During the last five years, however, share of these industries and commodities to gross domestic product tend to decrease. The objectives of this study are to analyze factors affecting Indonesian textile and textile’s product, and the prospect of Indonesian textile and textile’s product in the future. Results of the study show that domestic textile production was affected by world cotton price and wage rate, while the domestic garment production was affected by wage rate in the garment sector. Indonesia’s textile export to world market was influenced by domestic textile price, and Indonesia’s export garment was influenced by exchange rate (Rp/US$). Indonesian textile demand was affected by wage rate and domestic garment demand was affected by income per capita of Indonesia. In general, the prospect of Indonesian textile and textile’s product seems not too good. In fact, Indonesian textile and textile’s product had depended on high import cotton, investment, and exchange rate. So why, economy policies are still needed to accelerate Indonesian textile and textile’s product development.JEL Classification: C53, E60, F43, and F4.Keywords: export, open economy, forecasting, simulation, textile and textile’s product.
ANALYSIS OF THE IMPACT OF MACROECONOMIC POLICIES ON TEXTILE INDUSTRY AND ITS PRODUCTS IN INDONESIA
Authors: Hermawan Iwan
Published: January 2017

Textile and textile’s product play an important role in the Indonesian economy. During the last five years, however, share of these industries and commodities to gross domestic product tend to decrease. The objectives of this study are to analyze factors affecting Indonesian textile and textile’s product, and the prospect of Indonesian textile and textile’s product in the future. Results of the study show that domestic textile production was affected by world cotton price and wage rate, while the domestic garment production was affected by wage rate in the garment sector. Indonesia’s textile export to world market was influenced by domestic textile price, and Indonesia’s export garment was influenced by exchange rate (Rp/US$). Indonesian textile demand was affected by wage rate and domestic garment demand was affected by income per capita of Indonesia. In general, the prospect of Indonesian textile and textile’s product seems not too good. In fact, Indonesian textile and textile’s product had depended on high import cotton, investment, and exchange rate. So why, economy policies are still needed to accelerate Indonesian textile and textile’s product developmentJEL Classification: C53, E60, F43, and F4.Keywords: export, open economy, forecasting, simulation, textile and textile’s product.
THE IMPACT OF EXCHANGE RATE DEPRECIATION AND THE MONEY SUPPLY GROWTH ON INFLATION: THE IMPLEMENTATION OF THE THRESHOLD MODEL
Authors: Wimanda Rizki E.
Published: January 2017

This paper investigates the impact of exchange rate depreciation and money growth to the CPI inflation in Indonesia. Using monthly data from 1980:1 to 2008:12, our econometric evidence shows that there are indeed threshold effects of money growth on inflation, but no threshold effectof exchange rate depreciation on inflation. Even though the threshold value for exchange rate depreciation is found at 8.4%, the F-test suggests that there is no significant difference between the coefficient below and that above the threshold value. While, two threshold values are found for money growth, i.e. 7.1% and 9.8%, and they are statistically different. The impact on inflation is high when money grows by up to 7.1%, it is moderate when money grows by 7.1% to 9.8%, and it is low when money grows by above 9.8%.JEL Classification: C22; E31; E51.Keywbords: Inflation, Threshold Effect; Indonesia
THE SUSTAINABILITY OF STATE BUDGET IN DEBT REPAYMENT
Authors: Kuncoro Haryo
Published: January 2017

This paper is designed to analyze the sustainability of the central government budget in the case of Indonesia over the period of 1999-2009. First, we explore the theoretical background of the fiscal sustainability. Second, we develop a model to capture some factors determining the fiscal sustainability. Unlike the previous studies, we use both domestic debt and foreign debt to assess the fiscal solvency. Finally, we estimate it empirically. Based on the quarterly data analysis, we concluded that the government budget is unsustainable. This is associated with domestic debt rather than foreign debt. They imply that the central government should manage the debts carefully including re-profile, re-schedule, and re-structure them in order to spread the excess burden in the future. Also, the fiscal risks should be calculated comprehensively in order to maintain solvency.Keywords: Domestic debt, Foreign debt, Fiscal sustainability, Primary balanceJEL Clasbsification: E62, H63
ANALISIS TRIWULANAN: Perkembangan Moneter, Perbankan dan Sistem Pembayaran, Triwulan II - 2011
Authors: Bank Indonesia Tim Penulis Laporan Triwulanan
Published: January 2017

Rapat Dewan Gubernur (RDG) Bank Indonesia pada tanggal 12 Juli 2011 memutuskan untuk mempertahankan BI Rate pada level 6,75%. Tingkat BI Rate tersebut dipandang masih sesuai dengan upaya untuk menjaga peningkatan kegiatan perekonomian yang disertai dengan stabilitas yang tetap terjaga, di tengah tingginya ekses likuiditas domestik dan masih derasnya aliran masuk modal asing. Ke depan, Bank Indonesia tetap mewaspadai potensi risiko tekanan terhadap stabilitas makroekonomi, khususnya yang berasal dari berlanjutnya aliran masuk modal asing dan tingginya harga komoditas global. Sementara itu, inflasi diperkirakan akan tetap terkendali dan dapat lebih rendah dari perkiraan sebelumnya apabila tidak ada perubahan kebijakan Pemerintah di bidang harga energi serta tetap terjaganya pasokan dan distribusi bahan pangan. Bank Indonesia akan terus menerapkan bauran kebijakan moneter dan kebijakan makroprudensial, dengan penekanan pada pengendalian likuiditas domestik, aliran masuk modal asing, dan apresiasi Rupiah yang sejalan dengan tren apresiasi nilai tukar di kawasan Asia. Bank Indonesia meyakini bahwa penerapan bauran kebijakan moneter dan makroprudensial tersebut mampu untuk menjaga stabilitas makro dan membawa inflasi kepada sasaran yang ditetapkan, yaitu 5%±1% pada tahun 2011 dan 4,5%±1% pada tahun 2012.
PERSISTENSI INFLASI DI JAKARTA DAN IMPLIKASINYA TERHADAP KEBIJAKAN PENGENDALIAN INFLASI DAERAH
Authors: Arimurti Trinil , Trisnanto Budi
Published: January 2017

The main objective of this study is to measure the persistence of inflation level in Jakarta. In addition, this study intends to find out the source of inflation persistence and its implication to regional inflation control. The analysis of the regional inflation behavior developed in this paper is explored to commodities level. The empirical result indicates that the level of inflation persistence in Jakarta is relatively high, stemmed from high level of inflation persistance for most of commodities that construct inflation. Using the estimation results of the hybrid NKPC model, it shows that high inflation persistence in Jakarta mainly caused by inflation expectation, which is a combination of forward and backward looking. In this regards, it requires efforts gradually transform the behavior of inflation expectation to be more forward looking. Keywords: inflation peristence, expectation, NKPC.JEL Classification:E31, R10
ANALISA SOVEREIGN RISK NEGARA BERKEMBANG: TEMUAN DARI PERILAKU PREMI CREDIT DEFAULT SWAP
Authors: Ariefianto Moch. Doddy , Soepomo Soenartomo
Published: January 2017

Persepsi pelaku pasar asing terhadap perekonomian domestik dapat diukur melalui sovereign risk. Risiko ini merupakan hasil evaluasi/assestment lembaga rating mengenai probabilitas suatu entitas berdaulat (negara) akan melakukan wanprestasi terhadap kewajiban komersialnya (Beers dan Cavanaugh, 2006). Wanprestasi ini terjadi baik karena ketiadaan kapasitas maupun kesengajaan.Pengukuran persepsi risiko ini telah cukup lama dilakukan melalui rating oleh suatu lembaga pemeringkat. Menjelang akhir abad ke 20, suatu instrumen baru yakni Credit Default Swap (CDS) muncul sebagai suatu alat pengukuran sovereign risk. Sebagai suatu instrumen yang melakukan lindung nilai terhadap kemungkinan default hutang, maka secara alamiah premi dari CDS akan merefleksikan kemampuan membayar. Terkait dengan konteks sovereign, maka kemampuan membayar ini dapat dihubungkan dengan berbagai variabel ekonomi makro domestik dan global (aspek fundamental).Studi ini melakukan analisa ekonometris hubungan premi CDS terhadap variabel-variabel yang biasa digunakan sebagai penjelas sovereign rating. Berdasarkan literatur empiris yang ada diantaranya Beers dan Cavanaugh (2006), Weigel dan Gemmil (2006) serta Ismailescu dan Kazemi (2010), 9 variabel ekonomi makro yakni pertumbuhan PDB, inflasi, depresiasi, yield spread (terhadap US Treasury), rasio hutang pemerintah, cadangan devisa, rasio defisit fiskal, neraca berjalan dan global risk appetite digunakan untuk menjelaskan pergerakan CDS tenor 5 tahun. Suatu dataset panel yang terdiri atas 10 negara berkembang pada periode 2004-2009 (frekuensi tahunan) digunakan untuk memverifikasi pola hubungan yang ada.Estimasi dengan ekonometrika panel data menemukan risk appetite global sebagai variabel pengaruh terpenting disusul dengan cadangan devisa dan yield spread. Hal ini konsisten dengan literatur empiris yang ada serta menunjukkan keterkaitan yang tinggi perekonomian negara berkembang dengan siklus ekonomi dunia.Keywords : Sovereign Risk, Credit Default Swap, Fundamental Ekonomi Makro, Panel DataJEL Classification : F34 F32 G13 G15 C23
PENYEBAB BANK RUNS DI INDONESIA: BAD LUCK ATAU FUNDAMENTAL?
Authors: Simorangkir Iskandar
Published: January 2017

Bank runs and banking crisis has been a global cycling phenomenon both in developed and developing countries. This paper provide comprehensive analysis of the bank run determinant in Indonesia, including the economic fundamental, bank performance and self fulfilling prophecy during the period of 1990-2005, using the dynamic panel estimation of Arrelano-Bond. The Result shows that the self-fulfilling prophecy, bank performance (rentability, non performing loan) and macroeconomic condition (output growth, inflation and real interest rate), determine the bank runs in Indonesia. This conclusion is robust both for the sample period of 1997-1998 and 1990-2005. Klasifikasi JEL: C29, C33, G21Keywords: Bank runs, banking crisis, dynamic panel estimation, Arrelano-Bond, Indonesia
PENGUJIAN NETRALITAS UANG DAN INFLASI JANGKA PANJANG DI INDONESIA
Authors: Arintoko Arintoko
Published: January 2017

This paper investigates long-run neutrality of money and inflation in Indonesia, with due consideration to the order of integration, exogeneity, and cointegration of the money stock-real output and the money stock-price, using annual time-series data. The Fisher-Seater methodology is used to do the task in this research. The empirical results indicate that evidence rejected the long-run neutrality of money (both defined as M1 and M2) with respect to real GDP, showing that it is inconsistent with the classical and neoclassical economics. However, the positive link between the money and price in long run holds for money defined as M1 rather than M2, which consistent with these theories. In particular, besides the positive effect to long-run inflation, monetary expansions have long-run positive effect on real output in the Indonesian economy. JEL Classification: C32, E31, E51Keywords: long-run neutrality of money, inflation, unit root, exogeneity, cointegration
QUARTERLY ANALYSIS: The Progress of Monetary, Banking and Payment System Quarter II - 2011
Authors: Bank Indonesia Author Team of Quarterly Report
Published: January 2017

The Board of Governors Meeting (Rapat Dewan Gubernur/RDG) of Bank Indonesia on 12 April 2011 has decided to maintain the BI rate by 6.75%. This decision does not change the direction of Bank Indonesia»s monetary policy which tends to be strict in an effort to control the inflationary pressures that are still high, amid the government efforts to reduce inflationary pressure from volatile foods group. The Board of Governors considered that the strengthening of the rupiah so far can reduce these inflationary pressures, particularly from the rising price of international commodities (imported inflation). In addition, to minimize the negative impact of short-term foreign capital flows on monetary stability and financial system, the Board of Governors also has decided to replace the one-month holding period on SBI to six-month holding period, which shall take effect on May 13, 2011. Looking ahead, Bank Indonesia assessed that the possibility of the BI rate level adjustment is still open to dampen the incoming inflationary pressures. Bank Indonesia believed that the implementation of monetary and macro-prudential policy mix, supported also by the strengthened coordination of government policy, will be able to maintain the macroeconomic stability and bring inflation to the target, which are 5% ± 1% in 2011 and 4.5% ± 1% in 2012.
PERSISTENCE OF INFLATION IN JAKARTA AND ITS IMPLICATION ON THE REGIONAL INFLATION CONTROL POLICY
Authors: Arimurti Trinil , Trisnanto Budi
Published: January 2017

The main objective of this study is to measure the persistence of inflation level in akarta. In addition,this study intends to find out the source of inflation persistence and its implication to regional inflation control. The analysis of the regional inflation behavior developed in this paper is explored to commodities level. The empirical result indicates that the level of inflation persistence in Jakarta is relatively high, stemmed from high level of inflation persistence for most of commodities that construct inflation. Using the estimation results of the hybrid NKPC model, it shows that high inflation persistence in Jakarta mainly caused by inflation expectation, which is a combination of forward and backward looking. In this regards, it requires efforts gradually transform the behavior of inflation expectation to be more forward looking.JEL Classification: E31, R10Keywords: inflation peristence, expectation, NKPC
APAKAH PERKEMBANGAN FINANSIAL MEREDAM ATAU MEMPERBESAR DAMPAK SUATU KEJUTAN?
Authors: Permata Meily Ika , Ibrahim Ibrahim , Ari Hidayah Dhini
Published: January 2017

This paper analyzes the role of financial development on economic output in Indonesia. Using vector autoregressive method, the results confirm the positive impact of financial development on output growth. The interaction between the financial development and the shock either in financial or real sector shows that the financial development has a positive role to dampen the negative impact of the shock on the output growth, while strengthen the positive one. Another variable on the model, which significantly affect the output growth are excess money, term of trade, and the price. Compare to these variables, the marginal effect of financial development on output is smaller. JEL Classification : E44, O16Keywords : Financial development, shock, output volatility, VAR
BANK CAPITAL INFLOWS, INSTITUTIONAL DEVELOPMENT AND RISK: EVIDENCE FROM PUBLICLY - TRADED BANKS IN ASIA
Authors: Soedarmono Wahyoe
Published: January 2017

This paper examines the relationship between bank capital inflows and financial stability. Using a sample of publicly-traded commercial banks in Asia over the 2002-2008 period, our empirical results show that higher banking inflows measured by the share of foreign liabilities in banking reduces systematic risk, but increases bank-specific risk and total risk. A deeper investigation further suggests that an increase in total risk and bank-specific risk is driven by strong institutional development. Specifically, higher foreign liabilities in banking exacerbate bank-specific risk and total risk in countries with greater economic freedom. Hence, the reinforcement of prudential regulations is necessary to overcome bank-specific risk and total risk, particularly when the countries move to a more liberal economic environment. JEL Classification : G21, G28, G38Keywords : Banking Globalization, Economic Freedom, Capital Market Measures of Risk
RELATIVE EFFECTIVENESS OF INDONESIAN POLICY CHOICES DURING FINANCIAL CRISIS
Authors: Silalahi Tumpak , Chawwa Tevy
Published: January 2017

The objective of this paper is to review the impact of crisis and policy measures taken during the crisis, to evaluate the effectiveness of those measures and to analyze the exit strategy in Indonesia. The econometric model was used to evaluate the impact of monetary and fiscal policy to economic output using quarterly data from 1990 - 2010. The result shows that monetary and fiscal policies have significant impact to economic output. In the short run the changes in real GDP is significantly affected by changes in real monetary supply in the previous three quarter and real fiscal expenditures. The lesson learned from this research among other are that cooperation and coordination among the policy makers and the timely responses are very important in tackling the crisis; an effective conventional monetary policy in normal times may become less effective in a crisis thus unconventional monetary policy indeed necessary as timely policy response and the improvement for more timely disbursement of government expenditure is important to increase the effectiveness of this policy to stimulate economic output. Moreover, several Indonesian exit strategy and policies to face future challenges are very important to reach the ultimate objective of sustainable economic growth while maintaining macroeconomic stability. JEL Classification : E52, E62, E63Keywords: monetary policy, fiscal policy, financial sector policy, global financial crisis.
QUARTERLY ANALYSIS: The Progress of Monetary, Banking and Payment System Quarter III - 2011
Authors: Bank Indonesia Author Team of Quarterly Report
Published: January 2017

The Board of Governor Meeting of Bank Indonesia on October 11, 2011 decided to lower the BI rate by 25 bps to the level of 6.5%. Bank Indonesia will also maintain the stabilization of Rupiah particularly from the impact of global financial market shock. The decision is in line with the inflation expectation of below 5% on current and next year. Furthermore, these policies are meant to anticipate and to mitigate the negative impact of the global economic and financial slowdown on Indonesian economy. Looking ahead, the Board of Governor will continue to evaluate the global economic and financial performance and use the interest rate as well as the mix of monetary and the other micro prudential policies to mitigate the possible slowing down of Indonesian economic performance, especially on achieving the inflation target of 5% + 1% in 2011 and 4.5% + 1% in 2012.
DOES FINANCIAL DEVELOPMENT ABSORB OR AMPLIFY THE SHOCK?
Authors: Permata Meily Ika , Ibrahim Ibrahim , Ari Hidayah Dhini
Published: January 2017

This paper analyzes the role of financial development on economic output in Indonesia. Using vector autoregressive method, the results confirm the positive impact of financial development on output growth. The interaction between the financial development and the shock either in financial or real sector shows that the financial development has a positive role to dampen the negative impact of the shock on the output growth, while strengthen the positive one. Another variable on the model, which significantly affect the output growth are excess money, term of trade, and the price. Compare to these variables, the marginal effect of financial development on output is smaller.JEL Classification : E44, O16Keywords : Financial development, shock, output volatility, VAR
BANK CAPITAL INFLOWS, INSTITUTIONAL DEVELOPMENT AND RISK: EVIDENCE FROM PUBLICLY - TRADED BANKS IN ASIA
Authors: Soedarmono Wahyoe
Published: January 2017

This paper examines the relationship between bank capital inflows and financial stability. Using a sample of publicly-traded commercial banks in Asia over the 2002-2008 period, our empirical results show that higher banking inflows measured by the share of foreign liabilities in banking reduces systematic risk, but increases bank-specific risk and total risk. A deeper investigation further suggests that an increase in total risk and bank-specific risk is driven by strong institutional development. Specifically, higher foreign liabilities in banking exacerbate bank-specific risk and total risk in countries with greater economic freedom. Hence, the reinforcement of prudential regulations is necessary to overcome bank-specific risk and total risk, particularly when the countries move to a more liberal economic environment.JEL Classification : G21, G28, G38Keywords : Banking Globalization, Economic Freedom, Capital Market Measures of Risk
COMPETITIVE CONDITIONS IN BANKING INDUSTRY: AN EMPIRICAL ANALYSIS OF THE CONSOLIDATION, COMPETITION AND CONCENTRATION IN THE INDONESIA BANKING INDUSTRY BETWEEN 2001 AND 2009
Authors: Mulyaningsih Tri , Daly Anne
Published: January 2017

Few large banks dominate the Indonesia banking industri. Furthermore, in the past ten years, there were a series of mergers and acquisitions in the banking market. The facts cause implications on competition. In this paper, we examine these issues exploiting an unconsolidated annual financial report of all commercial banks between 2001 and 2009. The Panzar-Rose method is employed to examine the banks behavior in competition. Estimates indicate that banks in all three subsamples, large; medium-sized and small are working in a monopolistically competitive market. The analysis of market concentration supports the conventional view that concentration impairs competition. The study shows that the most competitive market was the medium-sized banks because it was least concentrated. In contrast, the large market was more concentrated thus it was less competitive. The consolidation policies driven by the Central Bank reduced market concentration because mergers and acquisitions were mostly conducted by the mediumsized and small banks. Further the improvement of market share distribution and the increasing capacity of the merging banks enhanced competition in the Indonesia banking industry.JEL Classification: D43, G21Keywords: Banking, market competition, market structure
ANALISIS TRIWULANAN: Perkembangan Moneter, Perbankan dan Sistem Pembayaran, Triwulan IV – 2011
Authors: Bank Indonesia Tim Penulis Laporan Triwulanan
Published: January 2017

Rapat Dewan Gubernur (RDG) Bank Indonesia pada hari ini memutuskan untuk mempertahankan BI Rate pada level 6,0%. Keputusan tersebut didasarkan pada evaluasi menyeluruh terhadap kinerja perekonomian terkini, beberapa faktor risiko yang masih dihadapi, dan prospek ekonomi ke depan. Dewan Gubernur memandang level BI Rate saat ini masih konsisten dengan pencapaian sasaran inflasi ke depan, dan tetap kondusif untuk menjaga stabilitas keuangan serta mengurangi dampak memburuknya prospek ekonomi global terhadap perekonomian Indonesia. Evaluasi terhadap kinerja dan prospek perekonomian secara umum menunjukkan bahwa perekonomian domestik masih tetap kuat dengan stabilitas yang tetap terjaga. Ke depan, Dewan Gubernur akan terus mencermati risiko memburuknya ekonomi global dan akan terus menjaga stabilitas makroekonomi dan sistem keuangan serta memberikan stimulus untuk perekonomian domestik. Dewan Gubernur menegaskan bahwa penerapan bauran kebijakan moneter dan makroprudensial yang bersifat counter-cyclical sangat diperlukan dalam pengelolaan makroekonomi secara keseluruhan serta untuk membawa inflasi pada sasaran yang ditetapkan, yaitu 4,5%±1% pada tahun 2012 dan 2013.
MARKET POWER PERBANKAN INDONESIA
Authors: Lubis Andi Fahmi
Published: January 2017

This study was aimed to estimate the degree of market power exercised by commercial banks incredit market in Indonesia.Model used to answered this study’s objective was Bresnahan-Lau oligopoly model that using structural equations to estimate the degree of market power.This model was using very different approach than Structure-Conduct-Performance (SCP) paradigm that commonly used in market power studies.Without using actual cost data and accounting profit, Bresnahan-Lau model was able to estimate directly the degree of market power from structural equations. The main result of this study was the degree of market power exercised by commercial banks in credit market relatively low; in other words the degree of competition in credit market in Indonesia was quite high.Keywords: market power, oligopoly, Bresnahan-Lau, structure, performance, conduct, SCP.JEL Classification : L13, G21
DAMPAK PERSISTENSI EKSES LIKUIDITAS TERHADAP KEBIJAKAN MONETER
Authors: Bathaluddin M. Barik , Adhi P. Nur M. , Wibowo Wahyu Ari
Published: January 2017

This paper analyzes the excess liquidity especially on banking industry and its impact on monetary policy on Indonesia. We firstly investigate the determinants of bank behavior on their favor for excess liquidity both for precautionary motive and involuntary, and furthermore determine the threshold between low and high excess liquidity regimes. On the next step, this paper evaluates the impact of excess liquidity on monetary policy on the two regimes. Thefirst result shows that the excess liquidity on bank with their precautionary motive is significantly determined by the volatility of money demand, volatility of economic growth, the bank cost of the bank, and also the lag of excess liquidity, which conform its persistence. Secondly, using the Threshold-VAR approach, this paper shows the switching regime occurs in 2005 from low to high excess liquidity. Lastly, the excess liquidity reduces the effectiveness of monetary policy on controlling inflation.Keywords: Excess liquidity, Threshold VAR, monetary policy transmission mechanism.JEL Classification: B23, E5
MARKET POWER OF INDONESIAN BANKING
Authors: Lubis Andi Fahmi
Published: January 2017

This study aimed to estimate the degree of market power exercised by commercial banks in the credit market in Indonesia. The model used to answer this study’s objective was the Bresnahan-Lau oligopoly model that uses structural equations to estimate the degree of market power. This model uses a very different approach than Structure-Conduct-Performance (SCP) paradigm commonly used in market power studies. Without using actual cost data and accounting profit, the Bresnahan-Lau model was able to estimate directly the degree of market power from the structural equations. The main result of this study showed that the degree of market power exercised by commercial banks in the credit market is relatively low; in other words, the degree of competition in the credit market in Indonesia is quite high. Keywords: market power, oligopoly, Bresnahan-Lau, structure, performance, conduct, SCP.JEL Classification : L13, G21
THE IMPACT OF EXCESS LIQUIDITY ON MONETARY POLICY
Authors: Bathaluddin M. Barik , Adhi P. Nur M. , Wibowo Wahyu Ari
Published: January 2017

This paper analyzes the excess liquidity especially on banking industry and its impact on monetary policy in Indonesia. We firstly investigate the determinants of bank behavior on their favor for excess liquidity both for precautionary motive and involuntary. Furthermore we determine the threshold between the low and high excess liquidity regimes. On the next step, this paper evaluates and compares the impact of excess liquidity on monetary policy between the two regimes. The first result shows that the excess liquidity on bank with their precautionary motive is significantly determined by the volatility of money demand, the volatility of economic growth, the bank cost of the bank, and also by the lag of excess liquidity, which conform its persistence. Secondly, using the Threshold-VAR approach, this paper shows the switching regime occurs in 2005 from low to high excess liquidity. Lastly, the excess liquidity reduces the effectiveness of monetary policy on controlling inflationKeywords: Excess liquidity, Threshold VAR, monetary policy transmission mechanism.JEL Classification: B23, E5
TRANSMISSION CHANNEL AND EFFECTIVENESS OF DUAL MONETARY POLICY IN INDONESIA
Authors: Ascarya Ascarya
Published: January 2017

This paper investigates the transmission mechanism of dual monetary system from conventional and Islamic policy rates to inflation and output. We apply Granger Causality and VAR methods on monthly data of Indonesian banking, during the period of January 2003 to December 2009. The result shows that conventional policy rate is transmitted to output and inflation, while Islamic policy rate are not. In addition, the shock of conventional interest rate, credit and interbank rate give a negative and permanent impacts on inflation and output, except for SBI (Certificate of Bank Indonesia) with positive impact to inflation  though negatively affect the output. On the other hand, the shock of PLS, financing and Islamic interbank PLS, as well as SBIS (Central Bank Shariah Certificate) give positive and permanent impacts on inflation and output. Keywords: Monetary transmission mechanism, Interest rate pass through, Conventional Banking, Islamic BankingJEL Classification: E43, E52, G21, G28
ANALYSIS OF SECTORAL EFFICIENCY AND THE RESPONSE OF REGIONAL POLICY
Authors: Ikram M. Abdul Majid , Prasmuko Andry , Anugerah Donni Fajar , Kurniati Ina Nurmalia
Published: January 2017

This paper analyzes the contributon of primary input; capital anda labor, on sectoral performance in Indonesia. The analysis cover sall sectors both in national and regional level, and also the dynamic of input efficiency across period. Using stochastic frontier production function approach, this paper found the aggregate share of capital is 0.20 and 0.34 for labor; conforming the dominance of labor. The highest three technical efficiency is Mining sector (88.65%), Manufacture (70.47%) and Financial (65.93%), while the lowest one is Electric, Gas and Water (25.38%). Keywords: efficiency, stochastic frontier, productivity, Indonesia.JEL Classification: D24, J24, O18
ANALISIS TRIWULANAN: Perkembangan Moneter, Perbankan dan Sistem Pembayaran, Triwulan I – 2012
Authors: Bank Indonesia Tim Penulis Laporan Triwulanan
Published: January 2017

Pertumbuhan ekonomi Indonesia pada triwulan I - 2012 tumbuh sebesar 6,3% (yoy). Sumber utama pertumbuhan ekonomi berasal dari konsumsi rumah tangga yang masih kuat sejalan dengan optimisme konsumen yang tetap tinggi dan investasi (PMTB) yang didukung oleh iklim usaha yang kondusif dan potensi pendanaan yang meningkat. Sementara itu, kinerja ekspor tumbuh melambat akibat berlanjutnya pelemahan ekonomi global yang menyebabkan turunnya daya serap negara mitra dagang utama. Di tengah perlambatan kinerja ekspor, impor masih tumbuh tinggi dengan masih kuatnya permintaan domestik. Ke depan, prospek ekonomi Indonesia keseluruhan 2012 masih tetap kuat pada kisaran 6,3 - 6,7%, meskipun berbagai faktor risiko masih tetap perlu diwaspadai.