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Asymmetric Impacts Of Monetary Policy Shock On Output Gap: Evidence From Regions In Indonesia

Author

Listed:
  • Sugeng Triwibowo

    (Universitas Gadjah Mada, Yogyakarta, Indonesia)

  • Defy Oktaviani

    (Universitas Indonesia, Depok, Indonesia)

Abstract

We examine the impact of the monetary policy on regional output gaps across 33 Indonesian provinces. Heterogeneous regional responses of the output gap to monetary policy shock are captured using the Vector Autoregressive model. Moreover, the idiosyncratic variations across provinces accounted for different responses are observed with the spatial econometric model. The spatial analysis suggests that economic structure and financial depth positively and significantly determine the aforesaid asymmetric responses. On the other hand, economic size and trade openness have a negative impact on them.

Suggested Citation

  • Sugeng Triwibowo & Defy Oktaviani, 2022. "Asymmetric Impacts Of Monetary Policy Shock On Output Gap: Evidence From Regions In Indonesia," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 25(3), pages 371-398, November.
    • Handle: RePEc:idn:journl:v:25:y:2022:i:3d:p:371-398
    DOI: https://doi.org/10.21098/bemp.v25i3.1648
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    More about this item

    Keywords

    Monetary policy; Output gap; Spatial model;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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