| This paper examines how exchange rate market pressure (EMP) response to its determinant shocks for the case of Indonesia using quarterly data for the period 1981:Q1–2004:Q4. We translate theoretical model of exchange rate market pressure into empirical model and test the model by means of a Structural VAR methodology. We find some evidence of a positive relationship between EMP and domestic credit. However, output growth also plays a role in the determination of EMP. In addition, there is evidence that output growth and money multiplier affected EMP negatively. |