Najah, Ariemas Hidayatun (2019) THE PERSISTENCE OF HIGH INFLATION IN INDONESIA AND HOW TO CONTROL INFLATION BASED ON ISLAMIC SCHOLAR PERSPECTIVE. S1 Undergraduate thesis, Universitas Darussalam Gontor.

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Abstract

The main objective to analyze the persistence of inflation by measuring the rate of inflation Administered Price and Volatile Food in CPI. Analysis of the determinants of inflation was also conducted by using variable M2 and SBI 2014 to 2018. Using the Estimation of Univariate Autoregressive (AR) model and ordinary least squares (OLS). The result indicates that the level of inflation persistence in Indonesia relatively high. With the coefficient 0,988 it means high inflation persistence a slow return of inflation to its long-run value after shock. The highest degree of 7 commodities is the group of commodity of Housing, Water, Electricity and Fuel that is equal to 0,987. The high degree of inflation persistence reflected by the length of the time period required to absorb of 50% shocks before returning to its natural value is 85.36 months approximately 7 years. OLS showed that M2 has a positive influence and NSBI has a negative influence on inflation. Based on islamic scholar thought the caused of high persistent in indonesia by lower currency of fiat money and interest rate for controlling inflation. Islamic monetary policy used gold and silver as a backup, Islamic finance avoids trading present for future money (prohibition of usury). A stable of increasing the currency is by trade and production not by increasing money in circulating. Keywords: Inflation, Administered Price, Volatile Food, M2, NSBI

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