Inflation and Spatial Spillovers in a Large Archipelago: Evidence from Indonesia

This paper examines Indonesian inflation dynamics with a Phillips-curve specification using province-level data (2015-2019), accounting for regional interactions and estimating spatial spillovers. It introduces two novel spatial weight matrices for an archipelagic setting—contiguity from Thiessen-polygon boundaries and a trade-based matrix from interregional input-output tables—and finds that different inflation and output-gap measures produce distinct spatial spillover effects.

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