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Mari Pangestu, a consultant at the IMF’s Regional Office for Asia and the Pacific when this paper was prepared, is Director at the Centre for Strategic and International Studies, Jakarta. Manggi Habir, was President Director of PEFINDO Credit Rating Agency, Jakarta, when this paper was written; currently he is studying for a Master in Public Policy degree at the Kennedy School of Government, Harvard University. An earlier version of this paper was presented at the “Financial Markets and Policies in East Asia” conference, organized by the Australian National University and IMF Regional Office for Asia and the Pacific, held in Canberra on September 4-5, 2000.
Including the famous Sumarlin shock that resulted in 8 trillion rupiah of state-bank deposits being converted into Bank Indonesia certificates (SBIs) and interest rates more than doubling.
The empirical evidence (Ghosh et al. 1999) on private consumption, for example, finds that the coefficient on domestic credit is statistically significant at the 12 percent level, while that on money is not significant at all.
Factual information taken from Lindgren et al. (1998), Appendix 1; World Bank (1998, 1999); and press releases.
Estimates based on interviews with IBRA officials.