What is the Role of Zakat and Stable Prices in Narrowing Inequalities in Indonesia?

The full potential of zakat has yet to be fully utilized, and inequality has increased among the Indonesian population over the last two decades. This study employs the Autoregressive Distributed Lag (ARDL) model to examine the influence of time impacts of zakat, gold prices, exchange rates, and oil prices on inequality in Indonesia. The results suggest that zakat can reduce disparities in the long and short term. Conversely, increasing gold prices, exchange rates, and oil prices can exacerbate inequality. The findings implied that the government and policymakers should improve zakat management, public trust, technology, and information systems to enhance zakat distribution. Additionally, since rapid responses to price shocks through inflation can negatively affect the ability of the poor and vulnerable to meet their basic needs, maintaining price stability is crucial.