Abstract
This study focuses on analysis (1) money supply effect, previous period money supply, the level of SBI (Bank Indonesia Certificate), the exchange rate, and the economy on inflation in Indonesia (2) The effect of inflation, domestic investment, previous period domestic investment, foreign investment, previous period foreign investment, and economic labor in Indonesia. Time series data using the simultaneous analysis model equation of the Two-Stage Least Squared (TSLS) method. The results of the study concluded that (1) the money supply had a significant and positive impact on inflation, the money supply in the previous period had a significant and positive impact on inflation, the SBI rate had a significant and negative effect on inflation, the exchange rate had a significant and positive effect on inflation. Meanwhile, the national economy has no significant and positive effect on inflation. If the money supply increases, inflation will increase. If the money supply in the previous period increased, inflation would also increase. If the SBI interest rate rises, inflation will depreciate. If the exchange rate rises, inflation will appreciate. If the level of the national economy rises, inflation will appreciate. (2) Domestic investment, previous period domestic investment, foreign investment, previous period foreign investment, and labor have a significant effect on the economy in Indonesia, while the inflation rate has no significant effect on the economy in Indonesia
Highlights
The less conducive global economy put pressure on Indonesia's payments balance in 2018, especially Quarter II and III
(2) Domestic investment, previous period domestic investment, foreign investment, previous period foreign investment, and labor have a significant effect on the economy in Indonesia, while the inflation rate has no significant effect on the economy in Indonesia
This challenge is evident in Quarter II and III of 2018, so it needs to be responded quickly because it will disrupt the stability of the national economy, financial system, and the momentum of economic recovery
Summary
Name Variable Economic(Y) Inflation (Inf) Amount of Money Supply (M2) Amount of Money Circulating of the Previous Period ( M2t-1) SBI Interest Rate (R) Exchange rate (E) Domestic Investment (Id) Domestic Investment of the Previous Period (Idt-1) Foreign Investment (Ia) Foreign Investment of the Previous Period (Iat-1) Labor (L). Each equation in this study is cointegrated or explained to each other. The variables in this study each equation are stationary to a different degree it is still co-integrated, namely, there is a long-term relationship or balance between these variables. While the economic probability value (Y) to inflation (INF) is small than α = 0.05. That Ho is rejected and Ha is accepted, this means that the inflation variable and the national economy have a two-way or mutually influential relationship
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