Causal Relationships GDP per Capita, Human Development Index and Corruption Perceptions Index in Indonesia

Abstract

The purpose of this study is to explain the causal relationship of GDP per capita, CPI and HDI Indonesia which is broken down into three hypotheses. The research variables were collected from the World Bank, Transparency International and United Nations Development Program documentation from 1995 to 2018. Results of the study: first, based on unit root test on each variable using Augmented Dickey-Fuller (ADF) at the 1st level difference in value absolute statistic t is greater than critical value according to MacKinnon table. Similarly, the Prob value is smaller than 0.05, therefore, the research variable data are stationary. Second, the granger causality test is by comparing the probability values of each hypothesis with a 5% error rate. Based on the data analysis not a single hypothesis was tested, however, it is found that the one-way relationship is that HDI drives GDP per Capita with a probability of 0.0161 <0.05 using lag length 4.