The Impact of Monetary and Fiscal Policy on Poverty in Indonesia

The aim of this research is to analyze monetary and fiscal policy impacts on poverty in Indonesia. The data used are secondary data from World Bank, BPS, and Indonesia Bank from 1980 to 2017. The estimation method used is the two-step Error Correction Model. The research results in showing that the economic growth has a significant negative impact on poverty; monetary policy proxied with interest rate has a significant negative impact on poverty; fiscal policy proxied with government expenditure has insignificantly impacted on poverty. Exchange depreciation positively and significantly impacts on poverty; inflation has a positive and significant impact on poverty; the economic crisis has a positive and significant impact on poverty. Indonesian poverty decrease is dominated by the monetary policy while fiscal policy insignificantly drops poverty number compared to the impact of monetary policy.