• Akhis R. Hutabarat


This paper investigates the relative importance of monetary transmission channel to inflation of passing persistent shock to the risk premium. The findings show that nominal exchange rate depreciation, triggered by a more persistent shock to interest risk premium, worsens the state of the economy in the short- and long-run. Such distinctive shocks effect is transmitted through the economy that typifies lack of response of consumer price disinflation to interest rate tightening caused by high real rigidity, strong cost channel of interest rate, strong cost channel of exchange rate pass-through and weak demand-side channel of exchange rate pass-through. This study suggests a proper monetary policy response, which is the smallest interest rate increases within the feasible set of monetary policy responses that the model recommends, to minimize the adverse effects of the shocks.

Keywords: Exchange rate, Balance of Payment, Monetary transmission and policy, Dynamic General Equilibrium.

JEL Classification: F41; E52; D58


Agénor, Pierre-Richard dan Peter J. Montiel (2008). Development Macroeconomics, Third Edition. Princeton University Press.

Al-Eyd, Ali dan Stephen G. Hall (2006). “Financial Crisis, Effective Policy Rules and Bounded Rationality in a New keynesian Framework”. NIESR Discussion Paper No. 272.

Barth, M.J., Ramey, V. (2001). “The Cost Channel of Monetary Transmission”. NBER Macroeconomic Annual," hal. 199-239.

Calvo, Guillermo (1983). “Staggered Process in A Utility Maximizing Framework”, Journal of Monetary Economics 12 (1983), hal. 89-100.

Chowdhury, Ibrahim, Mathias Hoffmanna, dan Andreas Schabert (2006). “Inflation dynamics and the cost channel of monetary transmission”. European Economic Review 50, hal. 995-1016

Christiano, Lawrence J., Martin Eichenbaum, dan Charles L. Evans (2005). “Nominal Rigidities and the Effects of a Shock to Monetary Policy,” Journal of Political Economy, Vol. 113(1), 1"45.

Clarida, R., J. Gali, M. Gertler (1999). “The Science of Monetary Policy: A New Keynessia Perspective”. Journal of Economic Literature, Vol.37, Issue 4, 1661-1707.

Darsono, Akhis R. Hutabarat, Diah Esti Handayani, Hery Indratno, Retno Muhardini (2002). “Survey of Bussiness Price Setting Behavior”. Makalah dipresentasikan pada The 26th CIRET Conference, Taipei, October 2002.

Drud, Arne (2006). “CONOPT”, GAMS - The Solver Manuals, ARKI Consulting and Development A/S, Bagsvaerd, Denmark.

Eichenbaum, M. (1992). “Comment on ‘Interpreting the macroeconomic time series facts: the Effects’of monetary policy” by C.A. SimsΔ.ΔEuropean Economic Review, 36, pp. 1001-1011.

Erceg, Christopher J., Andrew T. Levin (1983). “Imperfect credibility and inflation persistence”, Journal of Monetary Economics50 (2003), hal. 915-955.

Hall, Simon, Mark Walsh, Anthony Yates (1997). “How do UK companies set prices?”. Bank of England Working Paper 8905.

Hossain, A (2006). “Sources of Economic Growth in Indonesia, 1966-2003” Journal of Applied Econometrics and International Development, Vol.6 Issue 2.

Husman, Jardine A. (2005). “Pengaruh Nilai Tukar Riil Terhadap Neraca Perdagangan Bilateral Indonesia: Kondisi Marshall-Lerner dan Fenomena J-Curve”. Buletin Ekonomi Moneter dan Perbankan Bank Indonesia (Volume 8 No.3).

Hutabarat, Akhis R. (2007). “Monetary policy response to transient exchange rate and cost shocks”. Working Paper, University of Leicester. Tidak dipublikasikan.

Murchison, Stephen, Andrew Rennison, dan Zhenhua Zhu (2004). “A Structural Small OpenEconomy Model for Canada”. Bank of Canada Working Paper 2004-4.

Ravenna, Federico, Carl E. Walsh (2006). “Optimal monetary policy with the cost channel”. Journal of Monetary EconomicsVol. 53, pp. 199-216.

Romer, D. (2006). Advanced Macroeconomics, 3rd edn. New York: McGraw-Hill.

Rosenthal, Richard E. (2006). “GAMS” - A User’s Guide. GAMS Development Corporation, Washington, DC, USA

Sims, Christopher A. (1992). “Interpreting the macroeconomic time series facts: the effects of monetary policy”. European Economic Review, 36, hal. 975√1000.

Smets, Frank, dan Raf Wouters (2003). “An estimated stochastic dynamic general equilibrium model of the Euro area”, ECB Working Paper No.171. Sorensen, Peter Birch, Hans Jorgen

Whitta-Jacobsen (2005). “Introducing Advanced Macroeconomics - Growth and Business Cycles”. The McGraw-Hill Companies.

Young, Alwyn (1995). “The Tyranny of Numbers: Confronting the Statistical Realities of the East Asian Growth Experience”. The Quarterly Journal of Economics, Vol. 110, No.3, hal.641-680.

Woodford, M (2003). “Interest and Prices. Foundations of a Theory of Monetary Policy”. Princeton University Press.

Warjiyo, Perry dan Juda Agung (2002). “Transmission Mechanisms of Monetary Policy in Indonesia”, Bank Indonesia: Direktorat Penelitian Ekonomi dan Kebijakan Moneter.