Business, Management and Accounting
2 years ago

Indonesia's Inflation Path Redefined: Social's Loss Minimized, Economy Thrives!

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Research Square (Research Square)
Implementation of the Expectation–Augmented Phillip’s Trade-off to Create an Inflation Path that Minimize Social’s Loss Function: Evidence from Indonesia
MG Westri Kekalih Susilowati

Paper Summary

The study looked at how inflation and unemployment are related in Indonesia. They used a model to create an inflation path that minimizes social losses. The results showed that the Phillips curve existed in Indonesia from 1976 to 1996 but not from 2000 to 2022. Based on the actual inflation rate in 2022, the yearly inflation rate should be around 4.79%, 3.98%, or 3.64%. And according to the inflation target for 2023, the yearly inflation rate should be around 2.39%, 1.99%, or 1.82%.

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