EFEK THRESHOLDINFLASI TERHADAP PERTUMBUHAN EKONOMI REGIONAL DI INDONESIA
DOI:
https://doi.org/10.14203/JEP.27.1.2019.43-52Keywords:
Threshold, Inflation, Economic GrowthAbstract
Recent research states that relationship between inflation and economic growth is not linear. When inflation exceeds threshold, it will negatively affect economic growth. This study aims to investigate a linear and non-linear relationship between inflation and economic growth in Indonesia using provincial panel data. Linear relationships are tested using a fixed effect panel while non-linear relationships use the threshold fixed effect panel. Linear relationship of inflation in Indonesia has a negative effect on economic growth as well as government expenditure ratio growth and population growth, while investment growth and economic openness growth have a positive effect on economic growth. When conducting non-linear test, inflation in Indonesia negatively affected economic growth when it exceeded 9,57 and 9.59 percent. Meanwhile, when inflation exceeds 5.09 percent, economic growth in Indonesia has slowed. Inflation control policies must still be done to reduce the adverse effects of inflation, because high and fluctuating inflation is not good for the economy. This study advises stakeholders such as Bank Indonesia (BI) and the Regional Inflation Monitoring and Control Team (TPID) to be cautious when inflation starts to exceed 5.09 percent and be alert when inflation exceeds 9.57 percent and 9.59 percent.Downloads
References
Andres J, Hernando I. 1997. Does inflation harm economic growth? Evidence from OECD (Working Paper No. 6062).
Cambridge, MA: National Bureau of Economics Research.
Barro R J. (1996). Inflation and growth. Federal Reserve Bank of St. Louis Review, 78(3), 153–169.
Barro R J, Sala-i-Martin X. (2004). Economic Growth Second Edition. London (GB): The MIT Press.
Behera J. (2014). Inflation and its impact on economic growth: Evidence from six South Asian countries. Journal of Economics and Sustainable Development, 5(7), 145–154.
Cameron N, Hum D, Simpson W. (1996). Stylized facts and stylized illusions inflation and productivity revisited. Canadian Journal of Economics, 29(1), 152–162.
Chowdhury A, Ham R. (2009). Inflation Targeting in Indonesia: Searching for a Threshold. The Singapore of Economic Review. 54(4):645-655.
Chowdhury A, Siregar H. (2004). Indonesia’s Monetary Policy Dilemma: Constraints of Inflation Targeting. The Journal of Developing Areas.37(2):137-153.
De Gregario J. (1992). Effects of inflation on economic growth: Lession from Latin America. European Economic Review, 36(April), 417–425.
Dorrance S. (1963). The effects of inflation on economic development. Staff Papers, International Monetary Fund, 1(10), 1–47.
Enders W. (2015). Applied Econometric Time Series. New York (US): John Wiley & Sons Inc.
Fischer S. (1993). Inflation and Growth. Working Paper No. 1235. National Berau of Economics Research.
Friedman M. (1956). Quantity theory of money: A restatement. In M. Frideman (Ed.), Studies in the quantity theory of money (pp. 3–21). Chicago, IL: University of Chicago Press.
Gokal V, Hanif S. (2004). Relationship between inflation and economic growth. Working Paper 2004/04. Reserve Bank of Fiji.
Gylfason T. (1998). Output gains from economic stabilization. Journal of Development Economics, 56(1), 81–96.
Hansen. (1997). Inference in TAR models. Studies in Non-Linear Dynamics and Econometrics. 2(1):1–14.
______. (1999). Threshold effects in non-dynamic panels: estimation, testing, and inference. Journal of Econometrics. 93(2):345-368.
Mallik G, Chowdhury A. (2001). Inflation and economic growth: Evidence from South Asian countries. Asian Pacific Development Journal, 8(1), 123–135.
Ndoricimpa A. (2017). Threshold Effects of Inflation on Economic Growth in Africa: Evidence from a Dynamic Panel Threshold Regression Approach. Working Paper Series No. 249. African Development Bank.
Saeed A A J. (2007). Inflation and economic growth in Kuwait 1985–2005: Evidence from coinetgration and error correction model. Journal of Applied Econometrics and International Development, 7(1), 143–155.
Shi S. (1999). Search, inflation and capital accumulation. Journal of Monetary Economics, 44(1), 81–103.
Sidrauski M. (1967). Rational choice and patterns of growth in a monetary economy. American Economic Review, 57(2), 534–544.
Stockman A C. (1981). Anticipated inflation and the capital stock in a cash advance economy. Journal of Monetary Economics, 8(3), 387–393.
Sukirno S. (2012). Pengantar Teori Ekonomi Makro Edisi ke 3. Jakarta (ID): PT. RajaGrafindo Persada.
Sweidan O. (2004). Does Inflation Harm Economic Growth in Jordan? An Econometric Analysis for the Period 1970-2000. International Journal of Applied Econometrics and Quantitative Studies. 1(2)
Tobin J. (1965). Money and economic growth. Econometrica, 33(4), 671–684.
Todaro MP, Smith SC. (2009). Economic Development. Boston (US): Pearson.
Utari D., Cristina R., Pambudi S. 2016. Inflasi di Indonesia: Karakteristik dan Pengendaliannya. Jakarta: BI Institute.
Vinayagathasan T. (2013). Inflation and Economic Growth: A Dynamic Panel Threshold Analysis for Asian Economies. Journal of Asian Economics, 26, 21-41.
Warjiyo P, Juhro SM. (2016). Kebijakan Bank Sentral: Teori dan Praktik. Jakarta (ID): Rajawali Press
Widaryoko N. (2013). Inflasi dan Pertumbuhan Ekonomi: Pendugaan Ambang Batas Inflasi di Indonesia [tesis]. Bogor (ID): Institut Pertanian Bogor.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2019 Jurnal Ekonomi Pembangunan
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
