Money supply, interest rates, and electronic money as determinants of inflation in indonesia: Evidence from vecm analysis (2018–2023)
DOI:
https://doi.org/10.52300/grow.v11i2.24760Keywords:
Inflation, Money Supply, Interest Rates, Electronic Money, VECMAbstract
Inflation remains a key macroeconomic challenge for developing countries, including Indonesia, particularly amid monetary expansion and rapid digitalization of payment systems. This study analyzes the effects of money supply, interest rates, and electronic money (e-money) on inflation in Indonesia during the period 2018–2023. Using a quantitative approach, this research employs time-series data obtained from Bank Indonesia and the Central Statistics Agency (BPS). To capture both long-run equilibrium relationships and short-run dynamics among variables, the Vector Error Correction Model (VECM) is applied. The empirical results indicate that, in the long run, money supply and interest rates have a positive and statistically significant effect on inflation, suggesting that monetary expansion and higher borrowing costs contribute to rising price levels. In contrast, e-money exerts a significant negative effect on inflation in the long term, implying that the increasing use of digital payment instruments enhances transaction efficiency and reduces inflationary pressure. In the short run, only interest rates significantly affect inflation, while money supply and e-money do not show significant impacts, reflecting the presence of transmission lags in monetary policy and digital financial adoption. These findings highlight the importance of integrating digital payment systems into monetary policy frameworks. Policymakers are encouraged to consider the role of e-money development alongside conventional monetary instruments to achieve more effective inflation control and macroeconomic stability in Indonesia.
Downloads
References
Amaliyah, N., & Aryanto, R. (2022). Analisis pengaruh jumlah uang beredar dan suku bunga terhadap inflasi di Indonesia. Jurnal Ekonomi dan Bisnis, 15(2), 45-60.
Arifin, Z., & Oktavilia, S. (2020). Dampak uang elektronik terhadap inflasi: Studi kasus Indonesia. Jurnal Keuangan dan Perbankan, 24(1), 112-125.
Arner, D. W., Barberis, J., & Buckley, R. P. (2020). The evolution of fintech: A new post-crisis paradigm? In D. W. Arner, J. Barberis, & R. P. Buckley (Eds.), The Cambridge Handbook of the Law of Financial Technology (pp. 3-40). Cambridge University Press.
Bank for International Settlements. (2018). Central bank digital currencies. BIS Committee on Payments and Market Infrastructures.
Bank Indonesia. (2023). Statistik sistem pembayaran dan uang elektronik. Diakses dari
Bech, M. L., & Garratt, R. (2017). Central bank cryptocurrencies. BIS Quarterly Review, September 2017, 55–70.
Bjerg, O. (2017). Designing new money: The policy trilemma of central bank digital currency. Copenhagen Business School Working Paper.
Blanchard, O. (2021). Macroeconomics (8th ed.). Pearson.
BPS. (2023). Indeks harga konsumen dan inflasi. Badan Pusat Statistik Republik Indonesia.
Dickey, D. A., & Fuller, W. A. (1979). Distribution of the estimators for autoregressive time series with a unit root. Journal of the American Statistical Association, 74(366), 427-431.
Dornbusch, R., Fischer, S., & Startz, R. (2018). Macroeconomics (12th ed.). McGraw-Hill Education.
Enders, W. (2015). Applied econometric time series (4th ed.). Wiley.
Fisher, I. (1911). The purchasing power of money. Macmillan.
Fisher, I. (1930). The theory of interest. Macmillan.
Friedman, M. (1968). The role of monetary policy. The American Economic Review, 58(1), 1-17.
Gali, J. (2015). Monetary policy, inflation, and the business cycle: An introduction to the new Keynesian framework and its applications (2nd ed.). Princeton University Press.
Gujarati, D. N., & Porter, D. C. (2009). Basic econometrics (5th ed.). McGraw-Hill.
Hamzah, P., Yeba, E., Maithy, S. P., & Poetra, G. B. (2024). Opportunities and Challenges in Integrating Artificial Intelligence into Financial Auditing. Journal of Economic Education and Entrepreneurship Studies, 5(4), 591-600.
Harinie, L. T., Sukmani, M., Romadoni, M., & Bancin, J. B. (2025). Sociopreneurship in Ecotourism: Strengthening Village Economies Around Tanjung Puting National Park. Humaniora, 16(2), 141-151.
IMF. (2023). World economic outlook: A rocky recovery. International Monetary Fund.
JAYA, A., MARUMPE, D., & DAMAYANTI, N. (2024). NAVIGATING DUAL REALITIES: A COMPARATIVE STUDY OF WORK-LIFE BALANCE AMONG CELEBGRAM STUDENTS IN PONTIANAK AND PALANGKA RAYA’S DIGITAL LANDSCAPE. ILOMATA INTERNATIONAL JOURNAL OF MANAGEMENT Учредители: Yayasan Ilomata, 6(1), 299-313.
Johansen, S. (1991). Estimation and hypothesis testing of cointegration vectors in Gaussian vector autoregressive models. Econometrica, 59(6), 1551-1580.
Karuehni, I., Nahan, N., Toendan, R. Y., & Tunjang, H. (2024). The effectiveness of social media marketing in building brand awareness for startups. Journal of Economic Education and Entrepreneurship Studies, 5(4), 612-621.
Keynes, J. M. (1936). The general theory of employment, interest, and money. Palgrave Macmillan.
Kristinae, V., Meitiana, M., Prakoso, R. S., Sihombing, C., & Telagawathi, N. L. W. S. (2026). Why do Tourist Attractions and Service Quality Mediated by Visitor Satisfaction Influence the Interest in Revisiting Kum-Kum Tourism in Palangka Raya?. International Journal of Social Science and Business, 9(4), 731–747.
Kristinae, V., Sambung, R., Meitiana, M., Mering, L., Dwiatmadja, C., & Tunjang, H. (2023). Application of RBV theory in entrepreneurial orientation, dynamic capability and customer relationship management. Uncertain Supply Chain Management, 11(2), 707-712.
Lendra, L., Gawei, A. B. P., Sintani, L., Afanda, D. M., & Tjakra, J. (2023). The Assessment of Occupational Safety and Health Risk Management on Construction Projects During the Covid-19 Pandemic. International Journal of Disaster Management, 6(1), 1-18.
Lendra, L., Hatmoko, J. U. D., Wibowo, M. A., Gawei, A. B. P., Sintani, L., & Angela, V. F. (2025). Comparative Environmental Impact Assessment of Conventional Pavement Layers and Cement-Treated Recycled Base: Equipment Usage Analysis in Tropical Road Construction Projects. Environmental Research, Engineering and Management, 81(2), 92-111.
Lendra, L., Tjakra, J., Handayani, F., Sintani, L., & Angela, V. F. (2024). Model for implementation of occupational health and safety management policy for enhanced performance of construction workers. Universal Journal of Public Health, 12(2), 294-306.
Lucas, R. E. (1996). Nobel lecture: Monetary neutrality. Journal of Political Economy, 104(4), 661-682.
Maithy, S. P., Yeba, E., Hamzah, P., & Widyaningsih, D. S. (2025). The Role of Financial Technology in Transforming Business Models in the Banking Sector. Journal of Economic Education and Entrepreneurship Studies, 6(1), 135-149.
Mankiw, N. G. (2019). Macroeconomics (10th ed.). Worth Publishers.
Mering, L., Christa, U. R., Neneng, S., & Sambung, R. (2025). Mapping the landscape: A bibliometric and systematic review of green human resource management role in achieving sustainable firm performance. International Journal of Environmental Sciences, 9(5).
Mishkin, F. S. (2016). The economics of money, banking, and financial markets (11th ed.). Pearson.
Prasetia, Gerry A., et al. "Influence of Quality, Service, Atmosphere on Satisfaction Via Buying Interest – Season Coffee." Studi Ilmu Manajemen dan Organisasi, vol. 6, no. 2, Jul. 2025, pp. 469-484
Obstfeld, M., & Rogoff, K. (1996). Foundations of international macroeconomics. MIT Press.
Rahmayani, S., Fitriani, L., & Hidayat, A. (2021). Determinants of inflation in Indonesia: An ARDL approach. Jurnal Ekonomi Pembangunan, 19(1), 78-95.
Rogoff, K. S. (2016). The curse of cash. Princeton University Press.
Rosanti, D., & Maulida, R. (2022). Pengaruh perkembangan uang elektronik terhadap stabilitas harga di ASEAN-5. Jurnal Ilmiah Ekonomi dan Bisnis, 18(3), 205-220.
Sarlawa, R. (2025). Digital Financial Literacy and Financial Behavior: Pathways to Inclusion and Resilience. Jurnal Ilmiah Manajemen Kesatuan, 13(6), 5709-5726.
Sarlawa, R., & Ali, M. (2025). Determinants of Financial Well-Being: A Systematic Review of SEM Evidence. Jurnal Ilmiah Akuntansi Kesatuan, 13(6), 1865-1882.
Sintani, L., Nahan, N., & Pakpahan, A. (2024). The Gen Z's Participation in Cooperatives: Do Interest and Experience Matter?. Shirkah: Journal of Economics and Business, 9(3), 350-359.
Wanto, M., Meitiana, & Harinie, L. T. (2023). How dedication to the inspectorate of Central Kalimantan Province affects the competence and ethics of internal government supervisory apparatus? Jurnal Ilmiah Ilmu Administrasi Publik: Jurnal Pemikiran dan Penelitian Administrasi Publik, 13(1), 383–392.
Woodford, M. (2003). Interest and prices: Foundations of a theory of monetary policy. Princeton University Press.
World Bank. (2022). Global economic prospects. The World Bank Group.
Wulandari, R., & Narmaditya, B. S. (2019). Electronic money and inflation: Evidence from Indonesia. International Journal of Economics and Financial Issues, 9(3), 197-203.
