An Analysis of the Effect of Consumption Spending and Investment on Indonesia’s Economic Growth

Muhammad Rafiy (), Pasrun Adam (), Gamsir Bachmid () and Zainuddin Saenong ()
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Muhammad Rafiy: Department of Economics, Faculty of Economics and Business, Universitas Halu Oleo, Kendari, Indonesia.
Gamsir Bachmid: Department of Economics, Faculty of Economics and Business, Universitas Halu Oleo, Kendari, Indonesia.
Zainuddin Saenong: Department of Economics, Faculty of Economics and Business, Universitas Halu Oleo, Kendari, Indonesia.

Iranian Economic Review (IER), 2018, vol. 22, issue 3, 757-770

Abstract: This study aims to examine the effect of investment and consumption spending on Indonesia’s economic growth. The data used is the quarterly time series data from the first quarter of year 2003 to the fourth quarter of year 2013, comprising consumption spending, investment and economic growth. For the purpose of analysis, the autoregressive distributed lag (ARDL) model is used. The result of the study reveals that there are long-run and short-run effects of consumption spending on economic growth. Meanwhile, the effect of investment on economic growth is not significant. The study also reveals that the increase in government spending on economic growth is 1.88% if the consumption spending rises by 1%.

Keywords: Consumption Spending; Investment; Economic Growth; ARDL Model. (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:eut:journl:v:22:y:2018:i:3:p:757

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