DOES FINANCIAL DEVELOPMENT ABSORB OR AMPLIFY THE SHOCK?

  • Meily Ika Permata Bank Indonesia
  • Ibrahim Ibrahim Bank Indonesia
  • Hidayah Dhini Ari Bank Indonesia
DOI: https://doi.org/10.21098/bemp.v14i2.81
Keywords: Keywords : Financial development, shock, output volatility, VAR, Financial Development, Shock, output volatility, VAR

Abstract

This paper analyzes the role of financial development on economic output in Indonesia. Using vector autoregressive method, the results confirm the positive impact of financial development on output growth. The interaction between the financial development and the shock either in financial or real sector shows that the financial development has a positive role to dampen the negative impact of the shock on the output growth, while strengthen the positive one. Another variable on the model, which significantly affect the output growth are excess money, term of trade, and the price. Compare to these variables, the marginal effect of financial development on output is smaller.

 

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References

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Published
2012-01-30
How to Cite
Permata, M., Ibrahim, I., & Ari, H. (2012). DOES FINANCIAL DEVELOPMENT ABSORB OR AMPLIFY THE SHOCK?. Buletin Ekonomi Moneter Dan Perbankan, 14(2), 107-126. https://doi.org/10.21098/bemp.v14i2.81
Issue
Vol 14 No 2 (2011)
Section
Articles

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