Haryo Kuncoro
This article investigates the relationship between inflation and its uncertainty under the inflation-targeting regime in Indonesia and the Philippines over 2005(7)–2021(12). The Kernel density function and entropy index applications reveal that the price level in both countries is heterogeneous. The non-linear quantile regression estimation shows that inflation affects inflation uncertainty positively. Inflation more likely induces its uncertainty in higher quantiles. The effect exhibits an inconsistent linearity property. While the symmetric behavior holds in the Philippines, inflation in the case of Indonesia affects the inflation uncertainty differently, not only inter-quantiles but also intra-quantiles. Given that Indonesia and the Philippines have low inflation rates relative to other emerging markets, our findings suggest that announcing higher inflation targets may be costly to provoke higher inflation uncertainty. Accordingly, controlling inflation uncertainty in the inflation-targeting regime can be achieved if monetary policy is credible and independent. JEL Classification C14, C21, D08, E31, O23 © 2023 Emerging Markets Institute, Beijing Normal University.
Faculty of Economics, State University of Jakarta, Indonesia
Research at a Glance
Register to unlock
Topics & SDG Alignment
Register to unlock
Collaboration
Register to unlock
Author Profile (Selected)
Register to unlock
References Overview
Register to unlock
Journal & Source
Register to unlock
Metadata & Integrity
Register to unlock