PENGARUH KRISIS MONETER TERHADAP TINGKAT BUNGA NOMINAL Aplikasi Model Edward & Khan di Indonesia Tahun 1988.IV - 1999.111) = THE IMPACT OF MONETARY CRISIS ON NOMINAL INTEREST RATE (The applicati on of EDWARD & KHAN Model

Abstract

ABSTRACT This study aimed to investigate the impact of monetary crisis and other factors, such as foreign economic factor (expected depreciation of exchange rate, Rp/US $ and foreign interest rate), domestic economic factors (Riil Gross Domestic Product, Lag of Money Supply and Expected Inflation Rate) and non economic factor, namely the floating exchange rate policy. This research used quarterly time series data from 1988.IV 1999.III, consists of 44 observations taken from several publication. In analyzing those data, it employed Error Correction Model. The findings show that in the short run the monetary crisis has a significant effect on nominal interest rate but not in the long run. The foreign economic factors have significant impact on nominal interest rate. For the domestic economic factors, the real GDP has significant effect in the short . run while in the long run only expected inflation is significant. For the non economic factor, the effect of floating.exchange rate is significant only in the short run. The coefficient of t-test of Error Correction Term is significant. This is indicated that the ECM is valid. Key word: Error Correction Model â Forward Looking Buffer Stock Model -Nominal Interest Rate Monetary Crisis