Ishak-Kasim, Syurkani and Ahmed, Abdullahi D. (2009): Inflation expectations formation and financial stability in Indonesia. Published in: The Empirical Economic Letters , Vol. 8, No. 9 (September 2009): pp. 833-842.
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This paper examines the role of expectations in explaining the dynamics of inflation, interest rates and other key financial variables in Indonesia using VAR and error correction analyses. It is found that deposit interest rates, exchange rates and oil prices have significant impact on the expectations formation. We also found that administered prices are important, but their role decreases with time, while exogenous shocks remain a major source of movements in the expectations. The latter has long lasting effects and still accounts for more than 10 per cent of the variability of inflation expectations after the period of one year. This evidence shows the importance of inflation expectations formation, particularly on domestic financial stability.
|Item Type:||MPRA Paper|
|Original Title:||Inflation expectations formation and financial stability in Indonesia|
|English Title:||Inflation expectations formation and financial stability in Indonesia|
|Keywords:||Inflation expectations; Formation; Financial Stability; Indonesia|
|Subjects:||E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E42 - Monetary Systems ; Standards ; Regimes ; Government and the Monetary System ; Payment Systems
E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; Deflation
E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies
G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation
E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E61 - Policy Objectives ; Policy Designs and Consistency ; Policy Coordination
|Depositing User:||Syurkani Ishak-Kasim|
|Date Deposited:||31 Dec 2010 06:29|
|Last Modified:||24 Apr 2016 17:20|
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