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The Effect of Stock Prices and Exchange Rates on Economic Growth in Indonesia

Author

Listed:
  • La Saidi

    (Faculty of Math and Science, Universitas Halu Oleo, Kampus Bumi Tridhamma Anduonohu 93232, Kendari, Indonesia,)

  • Pasrun Adam

    (Faculty of Math and Science, Universitas Halu Oleo, Kampus Bumi Tridhamma Anduonohu 93232, Kendari, Indonesia,)

  • Rostin

    (Faculty of Economics and Business, Universitas Halu Oleo, Kampus Bumi Tridhamma Anduonohu 93232, Kendari, Indonesia,)

  • Zainuddin Saenong

    (Faculty of Economics and Business, Universitas Halu Oleo, Kampus Bumi Tridhamma Anduonohu 93232, Kendari, Indonesia,)

  • Muh. Yani Balaka

    (Faculty of Economics and Business, Universitas Halu Oleo, Kampus Bumi Tridhamma Anduonohu 93232, Kendari, Indonesia,)

  • Gamsir

    (Faculty of Economics and Business, Universitas Halu Oleo, Kampus Bumi Tridhamma Anduonohu 93232, Kendari, Indonesia,)

  • Asmuddin

    (Faculty of Teacher Training and Education, Universitas Oleo, Kampus Bumi Tridhamma Anduonohu 93232, Kendari, Indonesia,)

  • Salwiah

    (Faculty of Teacher Training and Education, Universitas Oleo, Kampus Bumi Tridhamma Anduonohu 93232, Kendari, Indonesia,)

Abstract

This research aims to investigate the effect of stock prices and exchange rates on Indonesia economic growth. The data were used the quarterly time series spanning in the period, 2004Q1-2015Q3. Econometric model were used to analyze these data is the autoregressive distributed lag model. The result of stationary test showed that all of the time series of share prices, exchange rates, and economic growth are stationary at the first difference, or integrated of order one, I(1). The results of cointegration test showed that the third time series of stock prices, exchange rates, and economic growth are not cointegrated. The results of effect test showed that there is an effect of the stock prices and exchange rates on Indonesia's economic growth. Furthermore, the amount of influence stock prices on economic growth is greater than the effect of exchange rates on economic growth.

Suggested Citation

  • La Saidi & Pasrun Adam & Rostin & Zainuddin Saenong & Muh. Yani Balaka & Gamsir & Asmuddin & Salwiah, 2017. "The Effect of Stock Prices and Exchange Rates on Economic Growth in Indonesia," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 527-533.
    • Handle: RePEc:eco:journ1:2017-03-68
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    2. Ayhan Orhan & Dervis Kirikkaleli & Fatih Ayhan, 2019. "Analysis of Wavelet Coherence: Service Sector Index and Economic Growth in an Emerging Market," Sustainability, MDPI, vol. 11(23), pages 1-12, November.

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    More about this item

    Keywords

    Stock Price; Exchange Rate; Economic Growth; Autoregressive Distributed Lag Model;
    All these keywords.

    JEL classification:

    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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