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Abstract
The objective of this research is to determine the effect of money supply and third-party funds to the inflation rate through Gross Domestic Product (GDP) in Indonesia. The type of data is secondary data. This research used time series data from 2008 to 2017 from various valid data source.The data then were analyzed by multiple regressionswith Two-Stage Least Square (2SLS) approach processed byEviews 9.0.According to resultsanalysis of this study, there is a positive and significant effect between money supply and third-party funds to GDP directly. Partially, it is found that money supply has no significant effect to inflation through GDP and Third-party funds have negative and significant effect to inflation through GDP.
Highlights
The success of economic development in one country can be measured by economic growth
While the indirect influence of third-party funds on gross domestic product through inflation has a coefficient of 0.521853781, which illustrates that every one percent increase in third party funds will reduce Gross Domestic Product (GDP) by 0.521853781 percent, so it means that the third party funds variable has a negative and significant effect on GDP through inflation in Indonesia for the period 2008-2017 indirectly
According to the results of the research estimation, the third party funds variable has a significant effect with a probability value below 5% which is 0.0000, and negatively affects GDP through inflation in Indonesia with a coefficient value of -0.521853781 which means that every one percent increase in third party funds will reduce GDP through inflation amounting to 0.521853781 percent
Summary
The success of economic development in one country can be measured by economic growth. For Indonesia as one of the developing countries, economic development is the main instrument for achieving national ideals. Economic growth is the process by which a nation is increasing output per capita in the long run. Arsyad (2010) stated that economic growth is an increase in GDP regardless population growth factor and changes in economic structure. The economy is always the most important concern because if a country's economy is in an unstable condition it will cause economic problems such as low economic growth, increasing unemployment, and high inflation rates. Economic growth has an important role in the development of a country, namely to encourage an increase in national income, an increase in the human development index, increase employment and www.psychologyandeducation.net strengthen the country's position in the eyes of the international. There are many factors influencing economic growth both in fiscal and monetary terms
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