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The relationship between macroeconomic variables and small-and-medium- enterprises in Indonesia

Author

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  • Malik Cahyadin

    (Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta, Indonesia)

Abstract

This study analyses the interaction between macroeconomic variables and indicators of small and medium enterprises (SME) in Indonesia. The analysed data include GDP, inflation, unemployment, poverty number, the number of SME business units, total SME employment, and SME investment. It uses Granger Causality Test and VECM. It suggests that macroeconomic variables and SME indicators have one causal direction. In addition, there are short term and long term relationships between macroeconomic variables and indicators of SME. The response of macroeconomic variables for indicators of SME takes 4.5-5 years to stabilize. Meanwhile, the contribution of SME to GDP indicator is likely to increase from quarter 1 to 64.

Suggested Citation

  • Malik Cahyadin, 2017. "The relationship between macroeconomic variables and small-and-medium- enterprises in Indonesia," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 9(1), pages 40-50, April.
    • Handle: RePEc:uii:journl:v:9:y:2017:i:1:p:40-50
    DOI: 10.20885/ejem.vol9.iss1.art5
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    References listed on IDEAS

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    1. Ludovica Ioana SAVLOVSCHI & Nicoleta Raluca ROBU, 2011. "The Role of SMEs in Modern Economy," Economia. Seria Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 14(1), pages 277-281, June.
    2. White, Halbert & Pettenuzzo, Davide, 2014. "Granger causality, exogeneity, cointegration, and economic policy analysis," Journal of Econometrics, Elsevier, vol. 178(P2), pages 316-330.
    3. Lawless, Martina & McCann, Fergal & McIndoe-Calder, Tara, 2012. "SMEs in Ireland: Stylised facts from the real economy and credit market," Quarterly Bulletin Articles, Central Bank of Ireland, pages 99-123, April.
    4. Thorsten Beck & Asli Demirgüç-Kunt, 2004. "SMEs, Growth, and Poverty," World Bank Publications - Reports 11278, The World Bank Group.
    5. Maximilian ROBU, 2013. "The Dynamic And Importance Of Smes In Economy," The USV Annals of Economics and Public Administration, Stefan cel Mare University of Suceava, Romania, Faculty of Economics and Public Administration, vol. 13(1(17)), pages 84-89, June.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    SME; macroeconomic variables; Granger causality; VECM;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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