PERAN VARIABEL MONETER TERHADAP INFLASI SEBELUM DAN SESUDAH PENERAPAN GREEN FINANCE DI INDONESIA DALAM KERANGKA INFLATION TARGETING

This study examines the impact of green finance on inflation within the Inflation Targeting Framework (ITF) in Indonesia, both in the short and long run, and identifies changes in the dynamics between green finance and monetary variables before and after the implementation of green finance policies. Quarterly time-series data from 2010Q1–2023Q4 are employed, sourced from Bank Indonesia, the Financial Services Authority, and Statistics Indonesia. The variables include inflation, policy interest rate, exchange rate, gross domestic product, and a green finance dummy variable. The analysis applies a Vector Error Correction Model (VECM) to estimate long-run cointegration and short-run dynamics through the Error Correction Term (ECT), Impulse Response Function (IRF), and Forecast Error Variance Decomposition (FEVD), complemented by wavelet coherence analysis to capture time-varying and frequency-dependent relationships. The results indicate that the exchange rate and green finance significantly affect long-run inflation, with a negative green finance coefficient and a significant ECT, suggesting rapid adjustment. IRF and FEVD confirm the increasing contribution of green finance to long-run inflation variability. These findings highlight green finance as a complementary instrument to ITF in enhancing price stability resilience.