The Determinants of Inflation in North Sumatra Error Correction Model

Duma Lasmaria Siagian, Muhammad Yusuf, Fitrawaty

2018

Abstract

The stability of inflation is a requirement for economic growth and benefit the improvement of community welfare. This research aims to analyze the effect of government spending, the money supply, exchange rates and economic growth against inflation in North Sumatra. The analysis uses equations by the method of Error Correction Model (ECM). This study analyzed the relationship between the dependent and independent variables in both the short term and long term. Estimation results show that in the long term and the short term, the variable amount of the money supply and economic growth was a negative and significant effect against inflation in North Sumatra. While the variables do not affect government spending significantly to inflation in North Sumatra. ECM model is considered valid because the value of the Error Correction Term (ECT) is significant and in the long term and the short term only the variable exchange rate that has a significant influence against inflation in North Sumatra. These results show that the exchange rate played an important role in controlling the level of inflation in North Sumatra.

Paper Citation

in Harvard Style

Siagian D., Yusuf M. and Fitrawaty. (2018). The Determinants of Inflation in North Sumatra Error Correction Model.In Proceedings of the 1st Unimed International Conference on Economics Education and Social Science - Volume 1: UNICEES, ISBN 978-989-758-432-9, pages 422-429. DOI: 10.5220/0009499804220429

in Bibtex Style

@conference{unicees18,
author={Duma Lasmaria Siagian and Muhammad Yusuf and Fitrawaty},
title={The Determinants of Inflation in North Sumatra Error Correction Model},
booktitle={Proceedings of the 1st Unimed International Conference on Economics Education and Social Science - Volume 1: UNICEES,},
year={2018},
pages={422-429},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0009499804220429},
isbn={978-989-758-432-9},
}

in EndNote Style

TY - CONF

JO - Proceedings of the 1st Unimed International Conference on Economics Education and Social Science - Volume 1: UNICEES,
TI - The Determinants of Inflation in North Sumatra Error Correction Model
SN - 978-989-758-432-9
AU - Siagian D.
AU - Yusuf M.
AU - Fitrawaty.
PY - 2018
SP - 422
EP - 429
DO - 10.5220/0009499804220429