Interest Rate Policy, Inflation and Economic Growth : A Policy Evaluation of Indonesia 1969 - 1997  

Oleh:

Permono, Iswardono Sardjono

Jenis: Article from Journal - ilmiah nasional - tidak terakreditasi DIKTI
Dalam koleksi: International Journal of Business vol. 6 no. 3 (Sep. 2004), page 419-439.
Topik: POLICY; banking deregulation; econometrics; financial liberalization; financial reform; interest rate policy; monetary policy; PAKJUN; PAKTO

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: II51.3 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

Accordingto shaw (1973) and McKinnon (1973) the most important element of economic development is financial liberalization. This action will eliminate the distortion, as what the governemnet of indoensia did on june 1, 1983 through deregulation of banking. The government eliminated the ceiling of credit and gave a full authority to each bank to determine their interest rates. This study looks up to fry (1995) model to test mckinnon - shaw hypothesis. The models were regressed with dummy variable. This effort will give illustration or conclusion of the structural change, that happened specifically caused by environmental or policy changes. Generally, insignificant in the relationship between interest rates in national saving and investment in indonesia could be caused by financial mechanisms those very long and complex channels. That is why real interest rates could not five effect to national saving directly. Export, especially form oil and gas and foreign debt were growth - stimulating factors. Meanwhile, money supply which supported by tight money policy and balance bydget policy caused indonesian inflation along those periods. The periodically analysis shows that deregulation of june 1983 (PAKJUN) were success to mobilize public dunf, encourage investment on real sector, and increase the economic growth, but failed to control the inflation rate. The implementation of october 1988 deregulation (PAKTO) had fluorished the establishment of new banks and created food competition among them. The competiiton had no longer on interest rate. Therefore, it can be said also the easy requirements of establishing banks become contra productive for PAKJUN policy, which had laid to the market mechanism. Basically, either PAKJUN or PAKTO was not policies in which urgently implemented in indoensia. Those financial deregulations were not supported by the existence of deregulation on real sectors, so that the financial deregulation were not effective to archieve their goals.

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