Differences in the Effect of Monetary Policy and Fiscal Policy on Inflation in Indonesia During COVID-19 and Russia-Ukraine Geopolitical Tensions

Abstract

The dynamics of the global economy during the COVID-19 pandemic and geopolitical tensions in Eastern Europe are marked by inflation problems experienced by countries around the world. The purpose of this study is to determine the effect of monetary policy and fiscal policy on inflation during the two crisis periods in Indonesia. This study uses secondary data sourced from the Ministry of Finance, Bank Indonesia, and the Ministry of Trade. The data used is a monthly time series from January 2019 to April 2023. The analysis methods used in this study are multiple linear regression and independent samples t-test. The results of this study indicate that BI interest rates, government expenditure, and taxes have a significant effect on inflation. Meanwhile, the money supply (M2) has no significant effect on inflation. There is a significant difference between money supply (M2) and inflation in the COVID-19 period and Russia-Ukraine geopolitical tensions. Meanwhile, there is no significant difference between BI interest rates, government expenditure, and taxes during the COVID-19 pandemic and Russia-Ukraine tensions.