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

Rostin Rostin, Abd Azis Muthalib, Pasrun Adam (), Muh. Nur, Zainudin Saenong, La Ode Suriadi and Jamal Nasir Baso
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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
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

International Journal of Energy Economics and Policy, 2019, vol. 9, issue 5, 14-19

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. (search for similar items in EconPapers)
JEL-codes: E30 E31 E42 O44 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eco:journ2:2019-05-3

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