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Nilai Tukar dan Trade Flows

Author

Listed:
  • Siti Astiyah

    (Bank Indonesia)

  • M. Setyawan Santoso

    (Bank Indonesia)

Abstract

The paper is testing the Marshal-Lerner condition and the J-Curve phenomenon on the Indonesian trade. We apply the panel regression model and anlyze the impact of the real depreciation of Rupiah on the trade performance, both in the short run and in the long run. The study indicates the insignificant of the Rupiah real depreciation to boost the export performance in the short run. When the time horizon is long enough, the increase of the export caused by the depreciation, will offset the increase of the import, hence in the long run the real depreciation of Rupiah may significantly increase the trade performance, but still in a small number. The implication is clear for the policy maker; if the aim of the policy is to boost the trade performance, then the exchange rate policy should not be an alternative, rather using policy to increase the productivity, efficiency, product quality management, loose tax policy and the creation of the business climate. This includes the industrial re-structuring to lower the import dependences.

Suggested Citation

  • Siti Astiyah & M. Setyawan Santoso, 2005. "Nilai Tukar dan Trade Flows," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 8(3), pages 1-32, December.
    • Handle: RePEc:idn:journl:v:8:y:2005:i:3:p:1-32
    DOI: https://doi.org/10.21098/bemp.v8i3.140
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    Citations

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    Cited by:

    1. Kim Edwards & Sahminan, 2008. "Exchange Rate Movements in Indonesia: Determinants, Effects, and Policy Challenges," Working Papers WP/25/2008, Bank Indonesia.

    More about this item

    Keywords

    J-Curve; Marshal-Lerner; trade; exchange rate; panel regression;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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