Analysis of the Effectiveness of Monetary Policy Transmission through a Line of Credit and Inflation Expectations in Indonesia

This study aims to determine the effectiveness
of the transmission mechanism of monetary
policy by reviewing the amount of the deadline
that required the transmission mechanism of
monetary policy in achieving the goals of the
final form of the output gap and inflation by
using the channel of credit and inflation
expectations. In addition, this study also aims to
determine the relationship long-term and short
against the target output gap and inflation.
This study uses a regression model Vector Error
Correction Model (VECM) to estimate the
influence of the transmission mechanism of
monetary policy to the output gap and inflation
through the channel of credit and the regression
model of Vector Autoregression (VAR) to
estimate the influence of the transmission
mechanism of monetary policy to the output gap
and inflation through the channel of inflation
expectations. The Data used in this research is
the data series time quarter from 2008 to 2018.
Data peneliltian used to estimate the influence
of the transmission mechanism of monetary
policy to the output gap and inflation through
the channel of credit in the form of secondary
data consisting of the benchmark interest rate of
Bank Indonesia, the interest rates on the
interbank money market 1 month, loan interest
rates, money supply (M2) and the amount of
working capital loans disbursed. While the data
used to estimate the influence of the
transmission mechanism of monetary policy to
the output gap and inflation through the channel
of inflation expectations in the form of secondary data consisting of the benchmark
interest rate of Bank Indonesia, inflation
expectations. The secondary Data used is
sourced from the annual reports that are
published from the official website of the Bank
of Indonesia, the data of the Central Bureau of
Statistics and the International Monetary Fund.
The results of this study showed that the
effectiveness of the transmission mechanism of
monetary policy through the credit channels
require the deadline each of the 8 (eight) of the
quarter and 10 (ten) quarter in achieving the
goals of the end of the output gap and inflation.
While the effectiveness of the transmission
mechanism of monetary policy through the
channel of inflation expectations require the
deadline each of the 4 (four) quarter and 6 (six)
quarter in achieving the goals of the end of the
output gap and inflation. The results also
showed only policy transmission mechanism
built rmelalui credit lines that have long-term
relationships against inflation while the
transmission mechanism of monetary policy
through the channel of inflation expectations
have short-term relationship strong.