ANALYSIS DETERMINANTS THE VELOCITY OF MONEY IN INDONESIA

Abstract

This research is a study that aims to analyze the effect of per capita income, inflation, interest rates and the use of electronic money on the circulation of money in Indonesia. This type of research is a descriptive study with a quantitative approach. The research data were obtained from the publication of the Badan Pusat Statistik (BPS) and Bank Indonesia. Based on the results of multiple linear regression analysis, the increase in electronic money transactions has no effect on the circulation of money in Indonesia. Per capita income and interest rates have a positive effect on the circulation of money in Indonesia, while inflation and electronic money have no effect on the circulation of money in Indonesia. It is hoped that the government will establish the right policies, especially to maintain the stability of interest rates and per capita income so that the circulation of money in Indonesia remains controlled.

Keywords: inflation; income per capita; interest rate; and electronic money