KREDIBILITAS TINGGI KEBIJAKAN MONETER BANK INDONESIA VERSUS STABILITAS OUTPUT RENDAH CIPTAKAN EFEK KESEJAHTERAAN NEGATIF

Abstract

This study examines optimal degree of credibility and stability in monetary policy instruments. Using the social loss function, agregat supply and monetary policy instruments, optimal growth of monetary base is lower than actual growth. Monetary policy is very credible, but the capacity to stabilizing output is very low. The consequence of the higher credibility and the lower output stability is explained by the higher activism and concervatism of the monetary policy. The monetary policy strategies create the positive effect of socal-loss. The lower degree of risk averse toward inflation versus output stability or flexibility and the higher precisision of the monetary policy instruments has lead the higher inflationary bias and monetary base growth. The uncertainty and certainty condition, the investigation of this study to recommend the limit growth of monetary base is 2.12-3.36 percent per quarterly. This limit can minimize social loss and optimize inflationary bias. Monetary authorities can achieving that the optimal growth of monetary base by increase in degree of risk averse toward inflation versus output stability or flexibility, and than monethary authorities decrease in activism and concervatism of monetary policy.