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The Effect of Crude Oil Prices on Inflation, Interest Rates and Economic Growth in Indonesia

Author

Listed:
  • Rostin Rostin

    (Depertment of Economics, Faculty of Economics and Business, Universitas Halu Oleo, Kendari 93232, Indonesia)

  • Abd Azis Muthalib

    (Depertment of Economics, Faculty of Economics and Business, Universitas Halu Oleo, Kendari 93232, Indonesia)

  • Pasrun Adam

    (Department of Mathematics, Faculty of Mathematics and Natural Science, Universitas Halu Oleo Kendari, 93232, Indonesia,)

  • Muh. Nur

    (Study Program of Management, Sekolah Tinggi Ilmu Ekonomi (STIE) Enam Enam, Kendari, 93117, Indonesia)

  • Zainudin Saenong

    (Depertment of Economics, Faculty of Economics and Business, Universitas Halu Oleo, Kendari 93232, Indonesia)

  • La Ode Suriadi

    (Depertment of Economics, Faculty of Economics and Business, Universitas Halu Oleo, Kendari 93232, Indonesia)

  • Jamal Nasir Baso

    (Depertment of Economics, Faculty of Economics and Business, Universitas Halu Oleo, Kendari 93232, Indonesia)

Abstract

This study aims to examine the effect of crude oil prices on inflation, interest rates, and economic growth in Indonesia. The data used are quarterly time series data on crude oil, interest rates, inflation, and Indonesia's economic growth from the first quarter of year 2001 to the second quarter of year 2017. To test the effect, an autoregressive distributed lag (ARDL) equations system or a multivariate ARDL model is used. The results of data analysis reveal that (1) there are no long-run and short-run effects of crude oil prices on inflation, (2) there are long-run and short-run effects of crude oil prices to the interest rate. In the long run, every 1% increase in the price of crude oil, the interest rate drops 0,26%, and (3) there is no effect of crude oil prices on economic growth both in the short and long-run.

Suggested Citation

  • Rostin Rostin & Abd Azis Muthalib & Pasrun Adam & Muh. Nur & Zainudin Saenong & La Ode Suriadi & Jamal Nasir Baso, 2019. "The Effect of Crude Oil Prices on Inflation, Interest Rates and Economic Growth in Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 9(5), pages 14-19.
    • Handle: RePEc:eco:journ2:2019-05-3
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    References listed on IDEAS

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    Cited by:

    1. Muhammad Alkirom Wildan & Mochamad Ali Imron & Endang Siswati & Siti Rosyafah, 2021. "Macroeconomic Factors Affecting Natural Gas Export Management," International Journal of Energy Economics and Policy, Econjournals, vol. 11(1), pages 639-644.
    2. Rosnawintang Rosnawintang & Tajuddin Tajuddin & Pasrun Adam & Yuwanda Purnamasari Pasrun & La Ode Saidi, 2021. "Effects of Crude Oil Prices Volatility, the Internet and Inflation on Economic Growth in ASEAN-5 Countries: A Panel Autoregressive Distributed Lag Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 11(1), pages 15-21.

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    More about this item

    Keywords

    crude oil prices; interest rate; inflation; economic growth; ARDL model.;
    All these keywords.

    JEL classification:

    • E30 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - General (includes Measurement and Data)
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth

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