Analysis of Inflation Targets in Indonesia During The New Normal Era: New Consensus Approach to an Open Economy

Abdul Kadir Arno (Institut Agama Islam Negeri Palopo)
Ilham Ilham (Institut Agama Islam Negeri Palopo)
Akbar Sabani (Institut Agama Islam Negeri Palopo)
Iksan Purnama (Institut Agama Islam Negeri Palopo)

Jurnal Iqtisaduna
Proceeding of International Conference on Islamic Economics and Business 2020

This article aims to discuss a growth model in terms of demand constrained by economic policy with inflation targeting in a super multiplier sraff model by analyzing how economic policy can affect productive capacity growth. This article also analyzes the open economy if inflation is a phenomenon resulting from the policy of the monetary authority that can manage the nominal exchange rate through changes in interest rates. Since the distribution of functional income will depend on the evolution of nominal wages, exchange rates and interest rates, we will show that the inflation targeting system, apart from being neutral in terms of long-term growth, can also produce different results in terms of the distribution of functional income