| dc.description.abstract | The increasing volatility of exchange rate since the beginning of the early
1980-90s seized attention many international economists and monetary
policymakers. The purpose of this research is to identify the issues of becoming of
the volatility of the exchange rate that is seen the theory of exchange rate
overshooting by Dornbusch is a theoretical explanation for high levels of
exchange rate volatility with the assumptions that goods prices are sticky. Then
implicates in determining the monetary policy framework in a country known as
the impossible trinity. Impossible Trinity consists of three the policy are not fully
always dominant used simultaneously, namely the stability of exchange rates, the
mobility of capital flows (FDI), and monetary independent policy, namely GDP,
inflation, and the interest rate. The research period lasts 1987Q1-2016Q4 with
the country which became the object of Indonesia, Malaysia, Thailand, and the
Philippines. In this research model is the model Dynamic Vector Error Correction
models (VECM) models, with the VECM (8). The results of the modeling VECM
(8) Granger Causality test linked to see the relationship causality is a significant
variable. Estimation results show that all countries in the object of the study
experienced the phenomenon of overshooting. Then in the determination of
policies Monetary found, that Indonesia puts more emphasis on independent
policy frameworks monetary, namely inflation and GDP. Malaysia at the level of
interest rates and Foreign Direct Investment. Thailand was discovered in the
framework of inflation and interest rates. While The Philippines effective against
the exchange rate and GDP trails through inflation. Exchange rate overshooting
determines of the monetery policy on impossible trinity that depend on the
characteristic and economic priority of a country’s. | en_US |
