Economics, Econometrics and Finance
3 years ago

Income shocks drive money demand in Indonesia, inflation and interest rates lag.

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Jurnal REP (Riset Ekonomi Pembangunan)
MONEY DEMAND ANALYSIS IN INDONESIA: THE SVAR APPROACH
Reza Ananda Putra, Mahrus Lutfi Adi Kurniawan

Paper Summary

The study analyzed how demand for money in Indonesia responds to changes in income, inflation, and interest rates using data from 2008 to 2019. The researchers found that money demand increases when income goes up, but decreases when inflation and interest rates rise. Income fluctuations have the biggest impact on money demand compared to inflation and interest rates.

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