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This paper analyzes the impact of trade liberalization on the domestic price of industry product by utilizing the structure-conduct-performance (SCP) model. Applying the model to a pooled data of the 3 digits ISIC level of Indonesian industry product, the result shows the abnormal price determination on industry level after the increase of trade liberalization. The existence of this phenomenon, the downward profit-margin rigidity, is indicated by the increase of the profit margin, which reduces the social welfare and tends to persist the inflation. A clear consequence for the Indonesian Central Bank, is to faster and increase the credibility of the middle and long term inflation target, either by clarify the policy signal and its consistency and increase the cooperation with the government.JEL: E31, L11, O24, P23Keyword:Trade liberalization, Structure-Conduct-Performance, Price, Industry

Dengan diberlakukannya Undang-Undang Bank Sentral yang baru No. 23 tahun 1999 tentang Bank Indonesia pada tanggal 17 Mei 1999, Bank Indonesia memasuki babak baru dalam menjalankan tugasnya. Babak baru tersebut, di antaranya, ditandai dengan diberikannya independensi pada Bank Indonesia dalam menetapkan target-target yang akan dicapai (goal independence) dan kebebasan dalam menggunakan berbagai piranti (instrumen) kebijakan dalam mencapai target tersebut (instrument independence).Di samping itu, sasaran pokok Bank Indonesia juga berubah dari multiple objectives menjadi lebih terfokus hanya kepada tujuan mencapai dan memelihara kestabilan nilai Rupiah. Dengan tugas yang lebih fokus tersebut maka tingkat keberhasilan Bank Indonesia dalam menjalankan misinya akan dapat lebih mudah diukur dan dipertanggung jawabkan kepada masyarakat. Hal ini sangat berbeda dengan undang-undang yang lama, dimana BI dituntut untuk memenuhi beberapa target sekaligus, yakni mendorong pertumbuhan ekonomi, kesempatan kerja, dan dan memelihara kestabilan nilai rupiah yang pencapaiannya pada hakekatnya dapat saling bertolak belakang, terutama dalam jangka pendek.

This paper investigates the relative importance of monetary transmission channel to inflation of passing persistent shock to the risk premium. The findings show that nominal exchange rate depreciation, triggered by a more persistent shock to interest risk premium, worsens the state of the economy in the short- and long-run. Such distinctive shocks effect is transmitted through the economy that typifies lack of response of consumer price disinflation to interest rate tightening caused by high real rigidity, strong cost channel of interest rate, strong cost channel of exchange rate pass-through and weak demand-side channel of exchange rate pass-through. This study suggests a proper monetary policy response, which is the smallest interest rate increases within the feasible set of monetary policy responses that the model recommends, to minimize the adverse effects of the shocks.Keywords: Exchange rate, Balance of Payment, Monetary transmission and policy, Dynamic General Equilibrium.JEL Classification: F41; E52; D58

We examine the preferences of respondents for six types of payment instruments, namely cash, debit and credit cards, card and server-based electronic money, and internet or mobile banking. By applying a nested logit model to 500 household data covering six provincial capitals in Indonesia, we find that the decision to choose payment instruments is made sequentially. Socio-economic characteristics, including education, age, income, and transaction objectives or functionality have a significant effect on the probability of using non-cash electronic payment instruments. We find a substitution pattern between payment instruments, not only between cash and non-cash instruments but also between non-cash instruments. In light of these findings, appropriate payment system policies are in order to hasten the use of non-cash payment.