The Effectiveness of Monetary Policy in Conventional and Sharia Perspectives on Inflation in 2015-2020
Neni Sri Wulandari (a*), Mega Rachma Kurniaputri (b), Raditya Sukmana (c), Yoga Tantular Rachman (d)

a) Doctoral Student Islamic Economic, Faculty of Economic and Business, Airlangga University
b) Departemen Pengaturan dan Perizinan Perbankan Syariah, Otoritas Jasa Keuangan
c) Faculty of Economic and Business, Universitas Airlangga
d) Faculty of Economics, Widyatama University

Abstract

The purpose of this study is to analyze the transmission mechanism of the dual monetary system applied in Indonesia to inflation in 2013 - 2020. The data in this study are sourced from Bank Indonesia and the Financial Services Authority in the form of time series which are then processed using the Vector Error Correction Model. The results show that conventional monetary policy through Bank Indonesia Certificates has a significant negative effect on inflation, while Sukuk has a significant positive effect on inflation. Meanwhile, through the Impulse Response Function (IFR) and Forecast Error Variance Decomposition (FEVD), it is known that conventional monetary policy is faster in controlling inflation than sharia monetary policy.

Keywords: Inflation, Monetary Policy, Islamic Economic System, Economics System

Topic: Income gap and poverty