INTERNATIONAL APPLICATION MODEL SHORT-LONG TERM BETWEEN GDP AND CONSUMPTION : CASE STUDY INDONESIA

Abstract

More recently, significant fluctuations in the Indonesian economy justify the need to pay more
attention to this issue. In this case, the main purpose of this research is to know the relationship
between two issues related to Indonesian macro economy called consumption and GDP for data
period during 1967 until 2014. This study investigates the relationship between GDP variables and
Indonesian consumption consumption variables using the test ARDL, cointegration and Granger
causality. The result of the research can be concluded that, there is long-run equilibrium relationship
between GDP and consumption with long-term ARDL model, 10% change of consumption will
produce long-term change of 44% in GDP. It is not surprising that there is no short-run equilibrium
relationship between GDP and consumption. 10% of consumption will result in a short-term
ARDL model change of 95% in GDP. The variables and consumption of GDP are cointegrated in
the long run significantly at lag interval 10, whereas the use of lag interval 1 and 5 is not credited
in the long run. Using a cointegration test with lag interval 1, 5 and 10 indicates significant for
all usage slowness. So it can be summarized in the context of GDP and coordinated short-term
economic consumption for all the prevailing interval lags. concluded that long-term causality test
results between GDP variables and significant consumption with time intervals 5 and 10. intervals
1, 15 and 20 have no long-term causality relationship between GDP variables and consumption
variables. a short-term causal model. With lagging intervals of 1, 5, 10 and 15, there is a short-term
causal relationship between the variable GDP and consumption. As for the use of delay interval
20 there is no causal relationship in the short term between the variable GDP and consumption in
Indonesia.