Analysis of the Relationship Between Economic Growth, Inflation and Unemployment in Indonesia

Muhammad Lukman KURNIAWAN; M.  PUDJIHARDJO; Ferry   PRASETYIA

doi:10.38142/ijesss.v4i6.935

Authors

Muhammad Lukman KURNIAWAN Brawijaya University, Indonesia
M. PUDJIHARDJO Brawijaya University, Indonesia
Ferry PRASETYIA Brawijaya University, Indonesia

DOI:

https://doi.org/10.38142/ijesss.v4i6.935

Keywords:

Economic Growth, Inflation, Unemployment, Causality

Abstract

The aim of developing a country is for the welfare of society. the policy makers are currently focused on the level of economic growth, inflation and unemployment. According to theory, these variables are closely related. The porpuse of the study was to analyze the relationship between economic growth, inflation and unemployment in Indonesia. Method used Vector Error Correction Model (VECM) analysis and Granger Causality Test. The results of this research show that in the long term, inflation has a significant positive relationship with economic growth, and unemployment has a negative and insignificant relationship. In the short term, inflation has no relationship to economic growth, and unemployment has a significant relationship. The results of the causality test, economic growth, inflation and unemployment do not have interrelationship.

Downloads

Download data is not yet available.

References

Abbas, S. (2014). Long Term Effect of Economic Growth on Unemployment Level?: In Case of Pakistan. Journal of Economics and Sustainable Development, 5(11), 103–108.

Ajija, S. R., Sari, D. W., Setianto, R. H., & Primanti, M. R. (2011). Cara Cerdas Menguasai Eviews. Jakarta: Salemba Empat

Alrabba, M. (2017). The Determinants of Unemployment Rate in Jordan: A Multivariate Approach. International Journal of Economics and Finance, 9(11), 109.

Ariefianto, M. D. (2012). Ekonometrika (Esensi dan Aplikasi dengan Menggunakan EViews). Jakarta: Erlangga.

Bank, W. (2020). World Development Indicators. Online Database.

Bayar, Y. (2014). Effects of economic growth, export and foreign direct investment inflows on unemployment in Turkey. Investment Management and Financial Innovations, 11(2), 20–27.

Case, K. E., Fair, R. C., & Oster, S. M. (2012). Case & Fair Principles of Economics 10th Edition.

Chowdhury, M. S. R., & Hossain, M. T. (2014). Determinants of Unemployment in Bangladesh: A Case Study. SSRN Electronic Journal, 16–20.

Gujarati, D. (2009). Dasar - dasar Ekonometrika Edisi 5. Jakarta: Salemba Empat

Harkko, J., Virtanen, M., & Kouvonen, A. (2018). Unemployment and work disability due to common mental disorders among young adults?: selection or causation?? European Journal of Public Health, 1–7.

Ichsan, M. F. (2020). The Analysis of Economic Growth, Unemployment Rate and Inflation on Poverty Levels in Indonesia (Using the Vector Error Correction Model (VECM) Method). Journal of Malikussaleh Public Economics, 3(2), 42. https://doi.org/10.29103/jmpe.v3i2.3210

Milner, A., Page, A., & LaMontagne, A. D. (2013). Long-Term Unemployment and Suicide: A Systematic Review and Meta-Analysis. PLoS ONE, 8(1). https://doi.org/10.1371/journal.pone.0051333

Mulyani, H. S., Prihartini, E., & Sudirno, D. (2020). Analisis Keputusan Transfer Pricing Berdasarkan Pajak, Tunneling dan Exchange Rate. Jurnal Akuntansi Dan Pajak, 20(2), 171–181.

Norström, F., Virtanen, P., Hammarström, A., Gustafsson, P. E., & Janlert, U. (2014). How does unemployment affect self-assessed health?? A systematic review focusing on subgroup effects. BMC Public Health, 14, 1310–2458.

Øverland, S. (2016). Unemployment and mental health. Occupational and Environmental Medicine, 73(11), 717–718.

Sembiring, V. B. P., & Sasongko, G. (2019). Pengaruh Produk Domestik Regional Bruto, Inflasi, Upah Minimum, dan Jumlah Penduduk Terhadap Pengangguran di Indonesia Periode 2011 – 2017. International Journal of Social Science and Business, 3(4), 430.

Sugiyono. (2018). Metode Penelitian Kuantitaif, Kualitatif, Kombinasi dan R&D. Bandung: Penerbit Alfabeta.

Sukirno, S. (2010). Teori pengantar makroekonomi edisi ketiga. In Raja Grafindo. Jakarta. Jakarta: PT. RajaGrafindo Persada.

Thayaparan, A. (2014). Impact of Inflation and Economic Growth on Unemployment in Sri Lanka: A Study of Time Series Analysis. Global Journal of Management and Business Research:BEconomics and Commerce, 13(5), 1–11.

Todaro, M.P. (2006). Pembangunan Ekonomi (Kesembilan). Jakarta: Erlangga.

Wilkinson, R. G., & Pickett, K. E. (2009). Income Inequality and Social Dysfunction. Annual Review Of Sociology, 35, 493–514. https://doi.org/10.1146/annurev-soc-070308-115926.