Dynamic Behavior of the IDR/USD Exchange Rate with a Monetary Model Approach

Dewi Suparmi, Alvin Sugeng Prasetyo, Yacob Juan Firmansyah, Risti Wibawa Ninglis

Abstract


This research aims to determine the behavior of the IDR/USD using the monetary approach. This study uses the Vector Error Correction Model (VECM) methods and using eviews 9 software. The data used in this research is data from the 2001q1-2022q3 period in the form of quarterly data. The results of this research show that IDR/USD exchange rate behavior based on a monetary model approach consisting of the Bilson, Dornbush, and Frankel model found that the average response was the difference in economic growth, the difference in money supply, and the difference in interest rates, as well as the difference in inflation when an exchange rate shock occurred. The IDR/USD shows a positive trend. Furthermore, the dynamic structure of the Bilson, Dornbush, and Frankel model shows that the economic growth difference variable has the highest contribution and the money supply growth difference variable has the lowest contribution value

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