The The Role Of Monetary Policy In Indonesia's Economic Development

English

Abstract

As a reflection of monetary policy, this study examines how Indonesia's money supply, savings, and credit at banks affect economic growth in Indonesia. With a study period of 2000 to 2021, this investigation makes use of secondary data from Bank Indonesia. Using an error correction model analysis, this study examines economic growth, money supply, total bank credit ratio, and total domestic savings. We found that monetary policy in Indonesia related to the money supply, total savings, and total credit is reflected in changes in the money supply, total savings, and total credit. Monetary policy which has a direct impact on the banking sector has a significant impact on economic growth. Appropriate monetary policy can encourage economic growth and improve people's welfare. However, inaccurate monetary policy endangers the country's economy.