Jurnal Ekonomi
Vol. 12 No. 04 (2023): Jurnal Ekonomi, 2023

ANALYSIS OF THE EFFECT OF BI RATE, EXCHANGE RATE, AND ECONOMIC GROWTH ON INFLATION FOR THE PERIOD 1993-2022

Nadia Laraswati (Department of Development Economics, Faculty of Economics and Business, Bengkulu University)
Novi Tri Putri (Department of Development Economics, Faculty of Economics and Business, Bengkulu University)



Article Info

Publish Date
02 Dec 2023

Abstract

This study is an attempt to understand the impact of three main factors, namely the Bank Indonesia interest rate (BI Rate), currency exchange rate, and economic growth on the inflation rate in Indonesia. Inflation is a crucial indicator in a country's economy, and understanding what influences it is vital for economic policy planning. In order to investigate these factors, this research employs the multiple linear regression analysis method using the Ordinary Least Square (OLS) technique, which is a commonly used statistical method to identify relationships between various variables. The data used in this study are secondary data obtained from various reliable sources, encompassing a series of observations in the form of time series data spanning the period from 1993 to 2022. These data offer a strong insight into the changes and trends that have occurred in the parameters under examination over two decades or more. The findings of this research hold significant implications for understanding the Indonesian economy. First, it is found that the Bank Indonesia interest rate (BI Rate) has a positive impact on inflation. This means that when the BI Rate increases, the inflation rate tends to rise. This indicates that Bank Indonesia's interest rate policy directly influences the dynamics of inflation in the country. Furthermore, economic growth has a significant negative impact on inflation. This implies that when the economy grows, the inflation rate tends to decrease. In this context, stable and robust economic growth can serve as a tool for controlling inflation.

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Journal Info

Abbrev

Ekonomi

Publisher

Subject

Economics, Econometrics & Finance

Description

Jurnal Ekonomi [p. ISSNĀ 2301-6280, e. ISSNĀ 2721-9879] is a peer-reviewed journal published Half times a year (June, and December) by SEAN Institute. Jurnal Ekonomi is intended to be the journal for publishing articles reporting the results of economics research. Jurnal Ekonomi invites manuscripts ...