Nexus of Money Function and Its Effect on Inflation Rate in Thailand and Indonesia

  • Authors

    • Rudy Badrudin
    • . .
    2018-08-08
    https://doi.org/10.14419/ijet.v7i3.21.17098
  • Money, Nexus, Inflation Rate

  • Abstract

    This study aims to investigate the development function of money. At the beginning, function of money is a barter between two commodities, C and C'. Then this becomes C-M-C' when the money is once introduced. The M-C-M' occurs when a businessman utilizes the money (M) to produce commodity (C) and resells it to generate more money (M'). Finally, the trading process of M - M' shows the capital or financial market, like the money or security market. The development of the function of money is shown by the changes of the money supply that measured with the inflation rate. This study contributes to advise the central bank in Thailand and Indonesia in managing the role of the central bank's credibility in achieving the inflation target and the proposed rules on monetary policy. Based on the data of 1990-2015 and using ANOVA and the regression analysis (α = 5%) the results show that 1) there is a significantly difference between the currency outside, demand deposits, and quasi-money; 2) the currency outside and the demand deposits in-significantly affects on the inflation rate; 3) the quasi money in-significantly affects and significantly affects on the inflation rate in Thailand and Indonesia.

     

     

  • References

    1. [1] McCauley RN, editor Core versus headline inflation targeting in Thailand. Bank of Thailand’s International Symposium on Challenges to Inflation Targeting in Emerging Countries, Bangkok; 2006.

      [2] Gulo A. Analisis Pengaruh Aspek Moneter dan Fiskal Terhadap Pertumbuhan Ekonomi Indonesia. jurnal VISI. 2008;16(3):595-611.

      [3] Inoue T, Toyoshima Y, Hamori S, 井上武, 豊島裕樹, 羽森茂之. Inflation targeting in Korea, Indonesia, Thailand, and the Philippines: the impact on business cycle synchronization between each country and the world. 2012.

      [4] Chantanahom P, Poonpatpibul C, Vongsinsirikul P. Exploring Inflation in Thailand: Through Sectoral Price Setting Behavior and Underlying Trend: Bank of Thailand; 2004.

      [5] Jiranyakul K. Relationship among money, prices and aggregate output in Thailand. 2009.

      [6] Subekti A. Dinamika inflasi Indonesia pada tataran provinsi. 2011.

      [7] Arintoko A. LONG-RUN MONEY AND INFLATION NEUTRALITY TEST IN INDONESIA. Bulletin of Monetary Economics and Banking (Buletin Ekonomi Moneter dan Perbankan). 2011;14(1):75-99.

      [8] Badrudin R. MONEY NEXUS ANTARA PERKEMBANGAN FUNGSI UANG DAN DAMPAKNYA TERHADAP INFLASI DI INDONESIA. KINERJA. 2013;17(1).

      [9] Zulverdi D, Haryono E, Pratomo W, Nugroho WA. Operasi Pengendalian Moneter yang Berbasis Suku Bunga dalam Mencapai Sasaran Inflasi. Bulletin of Monetary Economics and Banking (Buletin Ekonomi Moneter dan Perbankan). 2003;3(3):1-80.

      [10] Hutabarat AR. Determinan Inflasi Indonesia. Occasional Paper No OP/06/2005 Bank Indonesia. 2005.

      [11] Tanuwidjaja E, Choy KM. Central bank credibility and monetary policy in Indonesia. Journal of Policy Modeling. 2006;28(9):1011-22.

      [12] Nugroho PW, Basuki MU. Analisis faktor-faktor yang mempengaruhi inflasi di Indonesia Periode 2000.1–2011.4: Fakultas Ekonomika dan Bisnis; 2012.

      [13] Zhao SX, Chan RC, Chan NYM. Spatial polarization and dynamic pathways of foreign direct investment in China 1990–2009. Geoforum. 2012;43(4):836-50.

      [14] Andrianus F, Niko A. Analisa Faktor-Faktor yang Mempengaruhi Inflasi di Indonesia Periode 1997: 3–2005: 2. Economic Journal of Emerging Markets. 2006;11(2).

  • Downloads

  • How to Cite

    Badrudin, R., & ., . (2018). Nexus of Money Function and Its Effect on Inflation Rate in Thailand and Indonesia. International Journal of Engineering & Technology, 7(3.21), 67-72. https://doi.org/10.14419/ijet.v7i3.21.17098

    Received date: 2018-08-08

    Accepted date: 2018-08-08

    Published date: 2018-08-08