TUDI ANALISIS INTERAKSI KEBIJAKAN FISKAL DAN MONETER DI INDONESIA: APLIKASI METODE ANALYTIC HIERARCHY PROCESS (AHP) DAN GAME THEORY

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