The Macroprudential Policy: An Analysis of Indonesia’s Financial System Stabilities

Abstract

One of the macroprudential policies that are often used mainly in Asia and including Indonesia is the Loan-to-Value policy with a function to overcome systemic risks related to housing price spikes and credit distribution. Data analysis uses Vector Auto Regression (VAR) and simultaneous equations (Simultaneous Regression). The data in this study is time-series data. Exchange rate variables have negative impact on inflation because rate of exchange instability will affect capital flows or investment and international trade. And tax variables have an insignificant negative effect on inflation due to the impact of rising inflation due to the shock of tax increases in taxes that are seen as increasing production costs and sales costs to consumers but in contrast to credits that have an insignificant positive effect on inflation.