The Impact of Government Governance on Inflation Control in Indonesia
Article Sidebar
Main Article Content
Abstract
This study discusses the impact of public governance on inflation control in Indonesia amidst global and domestic economic dynamics. The main problem addressed is the extent to which institutional and non-monetary factors affect the achievement of monetary policy targets. This study employed a path analysis method using time-series data from 2010 to 2022. The analysis aimed to examine the effect of corruption control and political stability variables on the inflation rate, positioning the effectiveness of governance as an intervening variable. The results indicated that corruption control and political stability do not exert a significant direct effect on inflation. However, public governance was proven to have a significant direct effect on inflation control with a significance value of 0.048 (p < 0.05). Furthermore, the path analysis results demonstrated that corruption control and political stability exert a crucial indirect effect on inflation through the effectiveness of public governance. These findings conclude that Bank Indonesia's efforts to control the inflation rate cannot stand alone but are significantly determined by the overall quality of public sector governance. Based on these conclusions, it is recommended that the government continue to strengthen institutional governance quality by enhancing corruption control and maintaining domestic political stability to ensure the achievement of national macroeconomic stability targets.
Article Details
This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
References
Abdullah, M., Aisah, S., & Basri, M. (2024). Institutional quality, foreign direct investment, and economic growth in ASEAN countries. Journal of Economic Development Studies, 12(3), 45–62.
Ahmad, J., Fayaz, M., Rehman, Z. U., Tariq, A., & Masheed, Q. (2024). Causal link between governance and economic growth: empirical evidence from the SAARC countries. Liberal Arts and Social Sciences International Journal (LASSIJ), 8(1), 132-150.
Alam, M. R., Kiterage, E., & Bizuayehu, B. (2017). Government effectiveness and economic growth. Economic Bulletin, 37(1), 222-227.
Asian Development Bank. (2011). Global food price inflation and developing Asia. https://www.adb.org/sites/default/files/publication/28608/global-food-price-inflation.pdf
Dahan, M., & Strawczynski, M. (2020). Budget institutions and government effectiveness. Journal of Public Budgeting, Accounting & Financial Management, 32(2), 217–246. https://doi.org/10.1108/JPBAFM-03-2019-0055
Dao, L. T., Bui, N. T., & Doan, T. T. (2024). Corruption and foreign direct investment: Bayesian analysis approach. Journal of Governance & Regulation, 13(2), 255–266. https://doi.org/10.22495/jgrv13i2siart2
Dzihny, I., Wibowo, M. G., & Ihsan, A. (2023). Macroeconomics, human development and political stability: Evidence from OIC countries. Jurnal Ekonomi & Studi Pembangunan, 24(2). https://doi.org/10.18196/jesp.v24i2.19509
Elina, R. (2024). The impact of FDI, unemployment, carbon emissions, and inflation on economic growth in OI Ccountries: Toward long-term economic resilience. Jurnal Magister Ekonomi Syariah, 3(2 Desember), 54-68.
Ghozali, I. (2018). Aplikasi analisis multivariate dengan program IBM SPSS 25 (Edisi ke-9). Badan Penerbit Universitas Diponegoro.
Iman, C. N., & Wahyudi, S. T. W. (2024). Keterkaitan antara foreign direct investment, perdagangan international, indeks persepsi korupsi, nilai tukar dan pertumbuhan ekonomi di Indonesia. Journal of Development Economic and Social Studies, 3(1), 295–304.
Judijanto, L. (2024). The impact of inflation on economic growth: A comprehensive literature study. Journal of Community Dedication, 4(4), 786–796.
Kristofano, Y. Y., & Febriani, R. E. (2024). The role of political stability and foreign direct investment in Indonesia's economic growth. Asian Journal of Applied Business and Management, 3(3), 261–276.
Kurniasih, E. P., Islahiyah, D., Kurniawati, S., & Iqbal, I. (2023). Does corruption affect foreign direct investment? Empirical evidence from ASEAN Plus Three countries. Journal of Economics, Business, & Accountancy Ventura, 26(2), 167–179. https://doi.org/10.14414/jebav.v26i2.3256
Leogrande, A., Laureti, L., & Costantiello, A. (2023). The innovation index in Europe. International Journal of Entrepreneurship. 27. 1-45.
Nguyen, T. P., Thu, T. H. I., Dinh, H., & Tran, N. T. H. O. (2024). Exploring the role of institutional quality, trade openness, and financial development in driving the real exchange rate: Evidence in Southeast Asia countries. Montenegrin Journal of Economics, 20(2), 183–194. https://doi.org/10.14254/1800-5845/2024.20-2.15
North, D. C. (1990). Institutions, institutional change and economic performance. Cambridge University Press. https://doi.org/10.1017/CBO9780511808678
Nottage, L. (2023). Corruption and illegality in Asian investment arbitration. Springer. https://doi.org/10.1007/978-981-99-9303-1
Nur, U., Mutiarin, D., Jovita, H. D., Palomares, P. P., & Isolana, J. B. (2025). The role of good governance indicators in controlling corruption. Journal of Governance and Public Policy, 12(1), 83-99.
Nzenari, U. P. (2023). Corruption as a contributing factor to unemployment and environmental pollution in Nigeria: the niger delta perspective. Journal of Government and Political Issues, 3(1), 10-17.
Pappas, A., & Boukas, N. (2025). Examining impact of inflation and inflation volatility on economic growth: Evidence from European Union economies. Economies, 13(2), Artikel 31.
Rienadi, N. P., & Setyowati, E. (2025). The effect of FDI, exports, inflation on economic growth of the America and India 1983–2022. Al Qalam: Jurnal Ilmiah Keagamaan dan Kemasyarakatan, 19(3), 1730–1747.
United Nations Development Programme. (2024). Report 2023/2024: Reimagining cooperation in a polarized world.
World Bank. (2024). Worldwide Governance Indicators. https://info.worldbank.org/governance/wgi/
Zangina, S., Hassan, S., & Harun, M. (2020). Corruption and foreign direct investment: A conceptual review. Indian-Pacific Journal of Accounting and Finance, 4(1), 22–32.