Impact of Monetary Instrument Shock Against Inflation in North Sumatra: Two-Stage Least Square Method

The study explores the relationship among inflation and economic growth in
North Sumatra. Two-Stage Least Square (2SLS) technique is used to analyze the impact
of monetary instrument shock against inflation the period of 1994-2017. The result of
research concludes that economic growth effect significantly to inflation in North Sumatra
and positive direction. The amount of money in circulation, the money supply previous
period a significant and negative effect against inflation in North Sumatra. interest rate of
Bank Indonesia, unemployment is a significant and positive effect against inflation in
North Sumatra. Inflation has no effect on against the economic growth of North Sumatra.
The amount of money in circulation, a significant and positive effect toward economic
growth in North Sumatra. While the money supply previous period does not affect
economic growth in North Sumatra.