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

Authors

  • Rostin Rostin Depertment of Economics, Faculty of Economics and Business, Universitas Halu Oleo, Kendari 93232
  • Abd Azis Muthalib Depertment of Economics, Faculty of Economics and Business, Universitas Halu Oleo, Kendari 93232
  • Pasrun Adam Department of Mathematics, Universitas Halu Oleo, Kendari 93232 http://orcid.org/0000-0001-5597-7554
  • Muh. Nur Sekolah Tinggi Ilmu Ekonomi Enam-Enam, Kendari
  • Zainudin Saenong Depertment of Economics, Faculty of Economics and Business, Universitas Halu Oleo, Kendari 93232
  • La Ode Suriadi Depertment of Economics, Faculty of Economics and Business, Universitas Halu Oleo, Kendari 93232
  • Jamal Nasir Baso Depertment of Economics, Faculty of Economics and Business, Universitas Halu Oleo, Kendari 93232

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.

Keywords: crude oil prices, interest rate, inflation, economic growth, ARDL model.

JEL Classifications: E300, E310, E42, O440

DOI: https://doi.org/10.32479/ijeep.7829

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Published

2019-07-23

How to Cite

Rostin, R., Muthalib, A. A., Adam, P., Nur, M., Saenong, Z., Suriadi, L. O., & Baso, J. N. (2019). The Effect of Crude Oil Prices on Inflation, Interest Rates and Economic Growth in Indonesia. International Journal of Energy Economics and Policy, 9(5), 14–19. Retrieved from https://econjournals.com/index.php/ijeep/article/view/7829

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