Quantitative Easing, What Should Indonesia Do?
By Helmi Adam
After the global financial crisis there is usually a surge in economic capital flows to emerging markets (EME). Increasing contributions to the developed financial policies, increasing credit growth and appreciation of the exchange rate of recipient currencies. And with aggressive expansion (known as Quantative Easing, or QE) by the central banks of the United States, and other developed countries, the result was a "monetary tsunami" directed at currency wars. (See discussion at Bernanke, 2015.)
Many observers value quantitative easing, a major influence on exchange rates and interest rates in developing countries. Actually what is meant by Quantitative Easing (QE)? Quantitative easing is a monetary policy carried out by the central bank to increase the amount of money spent (the money supply). Quantitative easing or QE often arises in financial market reporting, because it is part of the efforts of the central bank to overcome the problem of the low rate of increase and economic growth.
Quantitative easing History was first carried out by the Japanese central bank (BoJ) in 2001, by reducing interest rates to zero percent. Then followed by central banks to carry out related policies, including also the central bank of the United States (The Fed).
In QE policy, the Central Bank will increase the amount of money spent, namely by purchasing a number of securities, and flooding the financial market with cash, thereby increasing the liquidity of the country's currency. Continuing the increase will increase as the amount of money incurred increases. Availability of excessive liquidity for banks, so that it is easy to channel credit while boosting economic growth. However, the amount of money spent increases because quantitative ease will weaken currency exchange rates. which could have caused a currency crisis.
However, it is difficult to estimate the problem of financial policy. Automatic Vector Regression Analysis (VAR) based on data that puts the central bank unable to identify this problem, mainly because it influences policies on asset prices more. Rogers, Scotti and Wright (2016) use hybrid "external instruments" to complement their VAR analysis to meet the approval of economic policy shocks. For example, Glick and Leduc (2015), Ferrari, Kearns, and Schrimpf (2016), and Curcuru (2017) found an exchange rate response to U.S. monetary easing monetary policy. rose after the crisis. By considering it as a previous monetary policy, the conventional one, while the one acting after the crisis, is unconventional using QE. However, it is almost impossible to know. because changes in monetary policy differ between countries and other countries.
In principle, conventional monetary policy influences yields and general financial conditions by influencing short-term interest rates. By comparing, transfer policies - specifically, longer-term-approved purchases can change the balance of supply / demand in the market approval and thus affect the premium provisions.
This dichotomy is very clear in practice: conventional policy actions can affect competition premiums (see Bhattari and Neely 2016) and QE discussions that can influence the Enrichment Rate and growth that will influence policy in the future, as supported in Woodford (2012). However, this can provide a measure that is useful for our analysis. So the question is whether what the US and Japan will do is conventional monetary policy or QE, if it is only conventional, it will only affect bond yields in developing countries, but it does not increase directly on economic promotion and growth, because it still depends on state policy each
Indonesia itself will carry out economic tightening, namely by cutting the APBN budget. Hope we will reduce demand, and this can have a bad impact Avoided Headwind Or it is difficult for our economy to grow. In the midst of large capital flows to developing countries, we can be more expansive. It reduces bank interest, and invests as much as possible in the production sector and revives our manufacturing industry, which appears to be in a state of death. Don't let us experience problems because of wrong ...
The author is the Director of the Syafaat Foundation Indonesian.
By Helmi Adam
After the global financial crisis there is usually a surge in economic capital flows to emerging markets (EME). Increasing contributions to the developed financial policies, increasing credit growth and appreciation of the exchange rate of recipient currencies. And with aggressive expansion (known as Quantative Easing, or QE) by the central banks of the United States, and other developed countries, the result was a "monetary tsunami" directed at currency wars. (See discussion at Bernanke, 2015.)
Many observers value quantitative easing, a major influence on exchange rates and interest rates in developing countries. Actually what is meant by Quantitative Easing (QE)? Quantitative easing is a monetary policy carried out by the central bank to increase the amount of money spent (the money supply). Quantitative easing or QE often arises in financial market reporting, because it is part of the efforts of the central bank to overcome the problem of the low rate of increase and economic growth.
Quantitative easing History was first carried out by the Japanese central bank (BoJ) in 2001, by reducing interest rates to zero percent. Then followed by central banks to carry out related policies, including also the central bank of the United States (The Fed).
In QE policy, the Central Bank will increase the amount of money spent, namely by purchasing a number of securities, and flooding the financial market with cash, thereby increasing the liquidity of the country's currency. Continuing the increase will increase as the amount of money incurred increases. Availability of excessive liquidity for banks, so that it is easy to channel credit while boosting economic growth. However, the amount of money spent increases because quantitative ease will weaken currency exchange rates. which could have caused a currency crisis.
However, it is difficult to estimate the problem of financial policy. Automatic Vector Regression Analysis (VAR) based on data that puts the central bank unable to identify this problem, mainly because it influences policies on asset prices more. Rogers, Scotti and Wright (2016) use hybrid "external instruments" to complement their VAR analysis to meet the approval of economic policy shocks. For example, Glick and Leduc (2015), Ferrari, Kearns, and Schrimpf (2016), and Curcuru (2017) found an exchange rate response to U.S. monetary easing monetary policy. rose after the crisis. By considering it as a previous monetary policy, the conventional one, while the one acting after the crisis, is unconventional using QE. However, it is almost impossible to know. because changes in monetary policy differ between countries and other countries.
In principle, conventional monetary policy influences yields and general financial conditions by influencing short-term interest rates. By comparing, transfer policies - specifically, longer-term-approved purchases can change the balance of supply / demand in the market approval and thus affect the premium provisions.
This dichotomy is very clear in practice: conventional policy actions can affect competition premiums (see Bhattari and Neely 2016) and QE discussions that can influence the Enrichment Rate and growth that will influence policy in the future, as supported in Woodford (2012). However, this can provide a measure that is useful for our analysis. So the question is whether what the US and Japan will do is conventional monetary policy or QE, if it is only conventional, it will only affect bond yields in developing countries, but it does not increase directly on economic promotion and growth, because it still depends on state policy each
Indonesia itself will carry out economic tightening, namely by cutting the APBN budget. Hope we will reduce demand, and this can have a bad impact Avoided Headwind Or it is difficult for our economy to grow. In the midst of large capital flows to developing countries, we can be more expansive. It reduces bank interest, and invests as much as possible in the production sector and revives our manufacturing industry, which appears to be in a state of death. Don't let us experience problems because of wrong ...
The author is the Director of the Syafaat Foundation Indonesian.