Abstract
The objective of Indonesian government based on the Presidential Instruction for Rice Policy is to preserve rice price stabilization. The instrument used is the government’s rice stocks by conducting rice market operations. The aim of this study is to see a long-run relationship between retail price of rice and rice market operations. Monthly data are taken from January 2005 to December 2017 and analyzed by carrying out cointegration analysis starting with a stationarity test of each variable, i.e. retail price of rice (PRR) and rice market operations (MO). The PRR and MO variables are stationary in the first difference test or I (1). The cointegration test indicates that MO and PRR have a long-run equilibrium. The result of the analysis using an error correction model shows that the sign of cointegration is negative, real and in line with expectation which shows a convergence to the long-run equilibrium, so that there is a rice price stabilization in the long-run equilibrium.
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