Abstract

The phenomenon of the neutrality of money in various countries invited economists determines its existence. Neutrality of money is being debated throughout history until this time in economics. The debate became two mahzab economic is mahzab of Classic and schools of Keynes. The findings of the neutrality of money by the camp Classic, bringing new discourse in economics, especially monetary economics. However, the flow Keynes against the neutrality of money is also a new discourse in the field of monetary economics. The aim of the study to determine the existence of neutrality of money against economic growth in Indonesia, besides of simulation models goal of this study to determine the relationship of exchange rates, inflation and 1-month SBI rate to economic growth in Indonesia. The analysis method used is Ordinary Least Square (OLS) with the establishment of model simulation and analysis of descriptive narrative. Results clause analysis with Ordinary Least Square method (OLS) on model simulations indicate that the neutrality of money is not applicable in Indonesia, as well as simulation models in line with the 1-month SBI interest rate and the nominal exchange rate have a significant effect. While inflation still shows the same dominant relationship. Descriptive narrative analysis gives an overview of the non-neutrality of money in Indonesia, so there needs to be an analysis or monitoring on the growth of the money supply M2.

Keywords: Economic Growth, Neutrality of Money