Analysis of Macroeconomic Variable Shocks and Monetary Policy on Real Effective Exchange Rates in Indonesia

This study examines the effect of monetary policy and macroeconomic variable shocks on the real effective exchange rate in Indonesia. The analysis model used is the cointegration of Johansen-Juselius and error correction models (ECM). Data is used by time series from 2008Q1 to 2018Q4. The findings in this study are in the long term monetary policy through interest rate policy (BIRate), economic growth, and economic openness significantly affect the real effective exchange rate in Indonesia. In the short term, interest rate policy (BIRate) and economic growth significantly affect the real effective exchange rate. Economic openness creates a disruption to the real effective exchange rate equilibrium in the short term but moves back towards its equilibrium in the long run.