Analysis of Regional Economic Growth and Inflation in Indonesia

Analysis of Regional Economic Growth and Inflation in Indonesia

MB Nani Ariani

Faculty of Economics and Business, UPN Veteran Jakarta, Indonesia
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Ferry Hadyanto

Department of Economics, Universitas Padjadjaran, Bandung, Indonesia
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Yayan Satyakti

Department of Economics, Universitas Padjadjaran, Bandung, Indonesia
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Indra Yudha Mambea

Department of Economics, Universitas Padjadjaran, Bandung, Indonesia
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Abstract

This study aimed to analyze macroeconomic factors that affect economic growth and regional inflation. The data used in this study included macro data from 33 provinces in Indonesia from 2004 to 2014. We employed a panel regression with the general least square method to analyze the influence of government expenditure variables, credit, the number of workers and the Human Development Index on economic growth as our economic growth model. In addition, a regional inflation model was used to estimate factors that determined inflation by running a probit panel regression with marginal effects. In order to capture the determinant of dummy inflation, we included labor productivity and the highest contribution rank of regional inflation-contributing commodities to the probability of achieving the inflation target.

Keywords: economic growth, regional inflation, probit panel regression
JEL codes: E31, 011, 023


 

 
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