Poverty Inflation FDI Consumption and Economic Growth in Indonesia in the Vector Autoregressive Model Analysis Yahya Nusa- Anwar Sanusi- Fajar Supanto- Savitri- Suryaning Bawono
Universitas Merdeka Malang
Abstract
The difference in the results from previous studies related to the impact of inflation on poverty is strengthened by an increase in the money supply from direct investment, which is the motivation for this research. This study^s aim is to ascertain how poverty, inflation, and foreign investment affect consumption spending in Indonesia based on the 1997-2021 time series data. This study used the quantitative method of Vector Autoregression estimation, and using data sources from the World Bank. The data will be processed with econometric models. From the study^s findings, it may be inferred that overall consumption affects inflation, this can be seen from the Granger causality test which shows that this variable has a one-way causal relationship. The results of the same test also show that FDI has an effect on total consumption and conversely consumption has an effect on FDI, this is evident because the test results show a two-way causality relationship. However, the poverty variable has no effect on total consumption and vice versa, because according to the causality test, the variable obtains an insignificant probability value. However, the VECM results explain that poverty has an effect on total consumption, and it is also seen that the effect of consumption on inflation is due to the larger t-statistic value and has a positive relationship. This implies that the rate of inflation will increase the lower the level of consumption. However, the Impulse Reason test shows that poverty has a negative trend, this also happens to the FDI variable.
Keywords: Poverty, Inflation, FDI, Consumption, Economic Growth, Indonesia
Topic: Poverty Alleviation and Reducing Inequalities
