| This paper assesses the role of equity price channel in transmission mechanism of unsystematic monetary policy in Indonesia. Author uses structural VAR model with restriction identification based on institutional knowledge developed by Kim and Roubini (2001), Brischetto and Voss (1999), and Elbourne and Salomons (2004); moreover, author espouses additional information for interdependent relationship between equity price and real gross domestic product. Contemporaneous coefficient analysis shows that equity price have a ignificant influence to real gross domestic product. Impulse response function and variance decomposition show that monetary policy has a great role to the economy but it is not to equity price shock. It could be said that transmission mechanism of unsystematic monetary policy via equity price channel in Indonesia is existed but the contribution only has a limited magnitude to the economy. |