Economic Interaction Between Malaysia and North Sumatra: An Analysis With Vector Error Correction Model and Granger Causality
International Journal of Economics & Business Administration (IJEBA), 2019, vol. VII, issue 2, 61-70
Purpose: This study aims to explain the economic interaction of North Sumatra province in Indonesia with the Malaysian economy and vice versa. The variables studied were the North Sumatra PDRB proxy from the economy of North Sumatra, Malaysia's GDP proxy from the Malaysian economy, Export-Import from both regions. Design/methodology/approach: This study uses time series data from 1990-2016. Test and analysis tools use descriptive statistics, ordinary least square (OLS), unit root tests, cointegration tests, vector error correction models (VECM), impulse response functions, granger causality tests. Findings: The results show that Malaysia's economy has a positive and significant impact on North Sumatra's exports to Malaysia, and North Sumatra's exports to Malaysia have a positive and significant impact on Malaysian exports to North Sumatra , meaning there is a two-way relationship. Moreover, North Sumatra's exports to Malaysia have a negative and significant impact on Malaysia's economy. Practical implications: The results show that the increasing economy of North Sumatra caused an increase in North Sumatra imports from Malaysia as well as an increase in Malaysia's economy which led to an increase in Malaysian imports from North Sumatra. Originality/value: This study shows the economic interaction and trade relationship analysis between neighbouring regions with multiple examinations of Vector Error Correction Model And Granger Causality.
Keywords: Economic interaction; trade relations; neighbouring regions; vector error correction model and granger causality. (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ers:ijebaa:v:vii:y:2019:i:2:p:61-70
Access Statistics for this article
More articles in International Journal of Economics & Business Administration (IJEBA) from International Journal of Economics & Business Administration (IJEBA)
Bibliographic data for series maintained by Marios Agiomavritis (). This e-mail address is bad, please contact .