Kristiandi, Septania Sherien (2026) THE IMPACT OF FEDERAL FUNDS RATE, EXCHANGE RATE, AND MONEY SUPPLY ON INFLATION IN INDONESIA. Undergraduate thesis, UPN Veteran Jawa Timur.
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Abstract
This study aims to analyze the impact of the Federal Funds Rate (FFR), Exchange rate (IDR/USD), and the broad money supply (M2) on inflation in Indonesia using monthly time-series data from January 2015 to December 2024. The Autoregressive Distributed Lag with Error Correction Model (ARDL-ECM) was applied to capture both short-run dynamics and long-run relationships among the variables. The results show that in the short run, the FFR has a significant and positive effect on inflation at both the first and second lag, reflecting a delayed transmission mechanism through. The exchange rate becomes significant at the second and third lag in the short run, both with positive direction. The money supply (M2) also shows a positive and significant effect on inflation in the short run. In the long run, however, only the exchange rate retains a weakly significant positive effect at the 10% level, while the FFR and M2 are both insignificant,. The ECM coefficient of -0.104939 confirms a valid long-run adjustment mechanism, with deviations from equilibrium corrected at approximately 10.49% per month, implying a full adjustment period of around 9 to 10 months. Keywords: Inflation, Federal Funds Rate, Exchange Rate, Money Supply, ARDL- ECM
| Item Type: | Thesis (Undergraduate) | ||||||||
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| Subjects: | H Social Sciences > HC Economics | ||||||||
| Divisions: | Faculty of Economic and Business > Departement of Economics | ||||||||
| Depositing User: | septania sherien kristiandi | ||||||||
| Date Deposited: | 02 Jun 2026 04:17 | ||||||||
| Last Modified: | 02 Jun 2026 04:17 | ||||||||
| URI: | https://repository.upnjatim.ac.id/id/eprint/52992 |
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