Analysis Factors that Influence the Money Demand in Indonesia

Liliana,; Djambak, Syaipan; Kahpi, Muhammad; Rohima, Siti; Sari, Aisyah Lian

doi:10.2991/aebmr.k.200520.031

Cited by 2 publications

(2 citation statements)

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“…Generally, the high global demand and subsequent price increases during this period resulted in higher incomes for the population, leading to increased demand for goods and services. Additionally, this situation was accompanied by inflationary pressures due to limited economic potential (Liliana et al, 2020).…”

Section: Resultsmentioning

confidence: 99%

Forecasting the potential output and growth of the manufacturing industry: a case study of Indonesia's manufacturing sector

Permana,

Yudoko,

Prasetio

2024

JESP

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Indonesia is currently experiencing deindustrialization, characterized by a manufacturing industrial sector growth rate lower than the overall economic growth rate. Therefore, it is necessary to encourage the development of the industrial sector to achieve sustainable development. The scenario for industrial development policy is determined based on an evaluation of the country's economic position in relation to current business cycle conditions. The evaluation is carried out through output gap analysis, which refers to the gap between actual and potential output. The research aim is to analyze output potential estimates and gaps in the Indonesian non-oil and gas processing industry sector. The methodology used in this research includes the HP Filter (Hodrick-Prescott), BP Filter (Band-Pass), and the Production Function Approach. The findings show that Indonesia's non-oil and gas processing industry experienced a slight decline below its potential between 2020 and 2021. Therefore, policymakers must consider this; in the short term, inflationary pressures are caused by a positive output gap, so the government needs to prioritize efforts to control inflation. Meanwhile, medium-term structural reforms must continue to increase potential output, including increasing labor force participation, sustainable investment for capital factors, and improving the quality of human resources and technological expertise for productivity factors. In particular, it is necessary to pay attention to the adoption of new emerging technologies.

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Section: Resultsmentioning

confidence: 99%

Forecasting the potential output and growth of the manufacturing industry: a case study of Indonesia's manufacturing sector

Permana,

Yudoko,

Prasetio

2024

JESP

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“…Similarly, Djambak, Syaipan, et al [13] analyze the impact of interest rates, inflation rate, and GDP growth variables on demand for money in Indonesia for the period 2005 to 2018. The study found that money demand is positively affected by inflation but statistically insignificant, whereas the effect of interest rate and economic growth is negative and statistically significant in Indonesia.…”

Section: Empirical Literaturementioning

confidence: 99%

Demand for Money and Inflation in Ethiopia

Godana

2023

macro. manag. & public. polic.

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One of the vital components of the macroeconomic model that helps policymaking is the demand for money function. Having reliable predictions on the money demand function helps in determining the optimum growth of money supply which is vital in controlling the inflation rate in the economy and also preventing monetary disturbances from affecting real output. In order to formulate and estimate the money demand function in Ethiopia, this study used quarterly data from 2000Q3 to 2021Q2 and employed the Ordinary Least Square method and Engle-Granger two-stage procedure for empirical analysis. The empirical result from the models indicates that, in the long run, all variables (real GDP, CPI inflation, real effective exchange rate, real interest rate and lagged real money balance) are significantly affecting the demand for money in Ethiopia. Whereas, the estimated coefficients of the short-run variable show that the real effective exchange rate, CPI inflation, and lagged real money balance are the main determinants of demand for money while the real GDP and real interest rate are insignificant. Another important finding is that absolute value of the coefficient of the error correction term implies that about 54.2% of the disequilibrium in real money demand is counter-balanced by short-run adjustment in each quarter. The study suggests that in conducting monetary policy, policymakers should consider not only the behavior of income and price but also the movement of exchange rates. The study also calls for appropriate formulation and estimation of the all-encompassing demand for money function that is capable of bringing stability to the growth of money coupled with sustainable economic growth.

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Analysis Factors that Influence the Money Demand in Indonesia

Cited by 2 publications

References 1 publication

Forecasting the potential output and growth of the manufacturing industry: a case study of Indonesia's manufacturing sector

Forecasting the potential output and growth of the manufacturing industry: a case study of Indonesia's manufacturing sector

Demand for Money and Inflation in Ethiopia

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