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Policies to Eliminate Poverty Rate in Indonesia

Author

Listed:
  • Akhsyim Afandi

    (Department of economics, Universitas Islam Indonesia, Yogyakarta, Indonesia,)

  • Dwi Wahyuni

    (Department of economics, Universitas Islam Indonesia, Yogyakarta, Indonesia)

  • Jaka Sriyana

    (Department of economics, Universitas Islam Indonesia, Yogyakarta, Indonesia.)

Abstract

This study aims to analyze the factors that influence the poverty rate in Indonesia in the period of 1981-2013. This research uses Error Correction Model (ECM) to estimate the empirical poverty model. The findings may be explained as follows: Economic growth does not influence the poverty reduction; meanwhile inflation has a significant positive effect on the poverty level. Foreign direct investment (FDI) as an indicator of economy openness has a negative impact on the poverty. In addition, Gini ratio as an income equality measurement has no significant influence on the poverty level. These findings show that the poverty level depends on macroeconomic instability especially price level. Higher inflation rate leads to higher rate of poverty in the country. Furthermore, the central government should keep the monetary sector using tight monetary policy to eliminate the poverty level.

Suggested Citation

  • Akhsyim Afandi & Dwi Wahyuni & Jaka Sriyana, 2017. "Policies to Eliminate Poverty Rate in Indonesia," International Journal of Economics and Financial Issues, Econjournals, vol. 7(1), pages 435-441.
    • Handle: RePEc:eco:journ1:2017-01-56
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    References listed on IDEAS

    as
    1. World Bank, 2015. "Economic Monitoring Report to the Ad Hoc Liaison Committee," World Bank Publications - Reports 21980, The World Bank Group.
    2. Chani, Muhammad Irfan & Pervaiz, Zahid & Jan, Sajjad Ahmad & Ali, Amjad & Chaudhary, Amatul R., 2011. "Poverty, inflation and economic growth: empirical evidence from Pakistan," MPRA Paper 34290, University Library of Munich, Germany, revised 2011.
    3. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    4. Eliana Cardoso, 1992. "Inflation and Poverty," NBER Working Papers 4006, National Bureau of Economic Research, Inc.
    5. World Bank, 2015. "Economic Monitoring Report to the Ad Hoc Liaison Committee," World Bank Publications - Reports 22721, The World Bank Group.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Mbulaheni Albert Dagume, 2021. "Factors Influencing Poverty in South Africa: Time Series Analysis," International Journal of Economics and Financial Issues, Econjournals, vol. 11(5), pages 86-95.
    2. Purna Fitria, 2017. "Assets and poverty status dynamics in 5 main regions in Indonesia," Economic Journal of Emerging Markets, Universitas Islam Indonesia, vol. 9(1), pages 104-113, April.

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    More about this item

    Keywords

    Gross Domestic Product; Investment; Inflation; Gini Ratio; Poverty;
    All these keywords.

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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