Jingga, Kartika Flamboyan Jingga (2026) ASSESSING RUPIAH REDENOMINATION READINESS THROUGH INFLATION DETERMINANTS IN INDONESIA USING ARDL APPROACH. Undergraduate thesis, UPN Veteran Jawa Timur.
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Abstract
Currency redenomination is often used to simplify transactions and strengthen currency credibility, but its success depends on stable macroeconomic conditions. This study evaluates Indonesia’s readiness for Rupiah redenomination by examining the determinants of inflation. Inflation is analysed exchange rate movements of eleven major currencies (USD, JPY, GBP, CHF, SGD, MYR, HKD, AUD, EUR), fiscal performance, trade dynamics Export and Import, and institutional quality proxied by the Political Index (Government Effectiveness). Quarterly data for 2015–2024 were obtained from Bank Indonesia, BPS-Statistics Indonesia, and the World Bank. The study applies the Autoregressive Distributed Lag (ARDL) approach with Heteroskedasticity and Autocorrelation Consistent (HAC) standard errors. The results indicate that Indonesia is not yet ready for redenomination. In the short run, inflation is significantly affected by exchange rate pass-through, fiscal expansion, and trade dynamics. Lagged inflation positively and significantly influences current inflation (0.6587), indicating inflation persistence. Although the Political Index affects short-run inflation expectations, its structural instability and insignificant long-run effect suggest limited institutional credibility. Exchange rate stability and stronger governance remain essential prerequisites for successful redenomination.
| Item Type: | Thesis (Undergraduate) | ||||||||
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| Subjects: | H Social Sciences > H Social Sciences (General) H Social Sciences > HB Economic Theory H Social Sciences > HC Economics |
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| Divisions: | Faculty of Economic and Business > Departement of Economics | ||||||||
| Depositing User: | Kartika Flamboyan Jingga | ||||||||
| Date Deposited: | 05 Aug 2026 02:25 | ||||||||
| Last Modified: | 05 Aug 2026 02:25 | ||||||||
| URI: | https://repository.upnjatim.ac.id/id/eprint/58466 |
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