| dc.description.abstract | This research aimed at analyzing the interaction between fiscal and monetary
policies in Indonesia. The main problem of the interaction between fiscal and
monetary policies lied on the occurrence of trade-off between the performance of
price stability and economic growth within a short term.
This research was the application of Analytic Hierarchy Process (AHP)
method and Game Theory. Game Theory is mathematical approach to define the
situation of conflict or competition occurred between fiscal and monetary policies in
Indonesia by designing competition model within the interaction. Determining the
pay-off functions and assigning several players some strategy set, then observing the
interaction between the two policies were necessary to create pay-off matrix as the
combination of the two players strategies. AHP method was used to find relative
important strategy which might be implemented by fiscal and monetary policies and
was used to measure each pay-off. The main instruments of AHP were a hierarchy
and data obtained from the expert’s perception. The AHP’s hierarchy was carried out
in the form of questionnaires to be answered by the respondents in the form of
quantitative data which later would be quantified.
Based on the application of Analytic Hierarchy Process (AHP) method and
Game Theory, pay-off value showed strategy set done by the players during the
interaction by carrying out their own strategies. The pay-off value of fiscal policy
showed that government’s expenditure strategy (GOV) and deficit in state budget and
expenditure (DAP) were strategies selected in responding to monetary policy. The
pay-off value of monetary policy showed that money circulation was a dominant
strategy selected in responding to fiscal policy. Therefore, better policy coordination
was necessary to optimize the achievement of the final objective of macro-economic
policy in the form of public welfare. In addition, it was also necessary to avoid
negative impacts which could lead to macro-economic instability | en_US |
