<![CDATA[The globalization of financial markets has facilitated increased capital mobility across countries, making international capital flows a critical factor influencing macroeconomic stability in developing economies such as Indonesia. This study aims to analyze the impact of international capital flows—measured by net capital flow—on foreign exchange reserves, exchange rates, economic growth, and inflation in Indonesia. Using a quantitative associative approach, the study employs quarterly data from 2005 to 2022 obtained from credible institutional sources such as Bank Indonesia and the Central Bureau of Statistics. The analytical methods applied include Vector Autoregressive (VAR) and Vector Error Correction Model (VECM), supported by stationarity tests, cointegration analysis, Impulse Response Function (IRF), and Variance Decomposition (VD). The empirical results reveal four key findings. First, international capital flows have a significant long-term negative relationship with Indonesia's foreign exchange reserves, highlighting the importance of managing the quality and stability of capital inflows. Second, capital inflows contribute to the long-term appreciation of the rupiah, although this effect is not significant in the short term. Third, foreign capital inflows positively affect Indonesia's economic growth in both the short and long term, provided they are directed toward productive sectors. Lastly, capital inflows exhibit a deflationary effect in the long run, indicating their role in domestic price stabilization, though short-term impacts remain limited. These findings underscore the dual role of international capital flows as both a driver of economic development and a potential source of macroeconomic vulnerability, warranting prudent and adaptive policy responses.]]>
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