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Variable

Coefficient

Standard Error

t-Statistic

Prob.

RER1?

0.025043

0.016495

1.518174

0.1313

YGAP1?

-0.015905

0.015635

-1.017288

0.3108

DPF?

0.505089

0.068653

7.357158

0.0000

DE?

0.019847

0.010704

1.854270

0.0659

DP1?

0.342132

0.158479

2.158846

0.0326

DC?

-0.002736

0.002362

-1.158389

0.2487

Weighted Statistics

R-squared

0.604167

Mean dependent var

Adjusted R-squared

0.557938

S.D. dependent var

S.E. of regression

0.012281

Sum squared resid

Log likelihood

554.1964

F-statistic

Durbin-Watson stat

1.839641

Prob(F-statistic)

Unweighted Statistics

R-squared

0.746972

Mean dependent var

Adjusted R-squared

0.717421

S.D. dependent var

S.E. of regression

0.021217

Sum squared resid

Durbin-Watson stat

1.406880

75 Table 4:

European Journal of Economics, Finance And Administrative Sciences - Issue 18 (2010)

The estimation of inflation function using the fixed effect model with weight (Cross Section Weights) and white heteroscedasticity for Non-Asia Region.

0.036090 0.018470 0.020661 13.06909 0.000000

0.029537 0.039913 0.061673

The results of this study emphasize the importance of managing inflation as one of economic stability indicator. The management of inflation in Asia becomes more complicated in compare to the EU and North America due to the high impact of their exchange rate changes. The Central Bank in Asian countries, therefore, should consider their exchange rate as the main indicators to achieve the inflation target.

References

1] 2]

Baltagi, B. H. 1995. Econometrics Analysis of Panel Data. Chichester, John Wiley & Sons.

Granger, C. W. J. 1969. “Investigating Causal Relations by Econometric Mode1s and Spectral Methods”. Econometrica, 37: 424-438.

Cross

3]

Kamin, S.B. dan M. Klau. 2003. “A Multi-Country Comparison of The Linkages Between

4] 5]

6]

7]

8]

9]

Inflation and Exchange Rate Competitiveness”. International Journal of Finance and Economics, 8:167-184. Mankiw, N. G. 2007. Macroeconomics 6th Eds. Worth Publishers, New York. Mishkin, F. S. 2001. The Economics of Money, Banking, and Financial Markets 6th Eds. Colombia University. Ndungu’, N.S. 1997. “Price and Exchange Rate Dynamics in Kenya: an Empirical Investigation (1970-1993)”. AERC research Paper, 58. Poirson, H. 2000. “Factor Reallocation and Growth in Developing Countries”. IMF Working Paper, No. 00/94. Rana, P. B. 1983. “The Impact of The Current Exchange Rate System on Trade and Inflation of Selected Developing Member Countries”. Asian Development Bank Economic Staff Paper, No. 18. Rivera-Batiz, L. dan A. Rivera-Batiz. 1994. International Finance and Open Economy Macroeconomics. Pretice Hall, New Jersey.

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