INFLASI INDONESIA DALAM PANDANGAN PHILLIPS CURVE

Abstract

This research want to anlysis about inflation in Indonesia by use New Keynesian Philllips Curve.
Analysis tool in this research is Vector Autoregressive (VAR), specifically VECM (Vector Error
Correction Model). VECM is a type of restrictive VAR to first determine endogenous variables
and exogeneous variable on the theory.Based on the regression results indicate that the Error
Correction Term (ECT) is significantly negative (-0.675167). It means that there is the existence
of the error term and the negative sign indicates an error capable of leading to equilibrium.
Based on VECM calculation,expected inflation affect on inflation in Indonesia(-0.913099).
Indonesia output gap have positive effect (62.98311) while world output gap does not affect
inflation in Indonesia. It means that more domestic factors determining inflation in Indonesia of
the foreign factors.Thus, Bank Indonesia as monetary authorities will be easier to create a policy
to govern inflation because domestic factors are easier to control than the foreign factors.
Key words: inflation, VAR, VECM, Phillips Curve, New Keynesian, output gap.