Logo

The Effect of Monetary Policy On MacroEconomic Stability And Stock Market : Evidence From Indonesia

Praptiningsih, Maria (2011) The Effect of Monetary Policy On MacroEconomic Stability And Stock Market : Evidence From Indonesia. AU Journal of Management, 9 (1). pp. 13-22. ISSN 1686-0039

This is the latest version of this item.

[img]
Preview
PDF (The Effect of Monetary Policy on Macroeconomic Stability and Stock Market : Evidence From Indonesia) - Published Version
Download (2205Kb) | Preview

    Abstract

    Monetary policy can have a significant effect on the movement in the stock market. This paper investigates the effect of monetary policy through monetary instruments on macroeconomic objectives and stock market utilizing Vector Error Correction Model (VECM) in order to examine the dynamic effect of Bank Indonesia Rate and Overnight Money Market Rate in achieving price stability. Foreign exchange stability, economic growth, and capital market stability. This paper utilizes Impulse Responses and Variance Decomposition approach to examine the responses and the contribution of monetary policy instruments in affecting the macroeconomic objectives. The finding confirmed that Bank Indonesia Rate and Overnight Money Market Rate are statistically significant in affecting the inflation rate, foreign exchange rate, the output growth and the Jakarta Composite Index. Finally, there is a trade-off between inflation and economic growth.

    Item Type: Article
    Subjects: H Social Sciences > HB Economic Theory
    Divisions: Faculty of Economic > Business Management Program
    Depositing User: Maria Praptiningsih
    Date Deposited: 03 May 2013 14:08
    Last Modified: 03 May 2013 14:08
    URI: http://repository.petra.ac.id/id/eprint/15947

    Available Versions of this Item

    Actions (login required)

    View Item