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Analysis of the Impact of Inflation on Economic Growth in Indonesia Using Simple Regression Method

Author

Listed:
  • Sri Nur Afifah
  • Amir Machmud
  • Navik Istikomah
  • Imas Purnamasari

Abstract

Purpose: This study aims to investigate the relationship between inflation and economic growth in Indonesia through a simple regression analysis using SPSS. The results of the regression analysis will provide insights into the nature and significance of the relationship between inflation and economic growth in the Indonesian context. Design/Methodology/Approach: The research objective is to assess the impact of inflation, represented as the independent variable, on economic growth, the dependent variable. The identified research variables include the inflation rate and the Gross Domestic Product (GDP) growth rate. The methodology involves employing a simple regression model in SPSS to analyze historical data spanning the last decade. The samples consist of economic data collected annually from various reliable sources. A purposive sampling method is applied to ensure representation across diverse economic sectors. Findings: The simple linear regression analysis reveals a statistically significant negative coefficient of inflation at -0.250527. This outcome indicates a robust and inverse linear relationship between the inflation rate and economic growth in Indonesia over the past decade. Practical Implications: These findings hold crucial implications for economic policy formulation in Indonesia, emphasizing the urgency of maintaining price stability to support sustainable economic growth. Originality/Value: A strategic focus on inflation control may serve as a catalyst for fostering positive economic growth.

Suggested Citation

  • Sri Nur Afifah & Amir Machmud & Navik Istikomah & Imas Purnamasari, 2024. "Analysis of the Impact of Inflation on Economic Growth in Indonesia Using Simple Regression Method," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 99-107.
    • Handle: RePEc:ers:ijebaa:v:xii:y:2024:i:4:p:99-107
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    References listed on IDEAS

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    2. Eleftherios Thalassinos & Nejib Hachicha & Amira Hakim, 2022. "The International Spillover Among Sectors and the Interconnectedness to the Global Inflation Cycle," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 12(1), pages 3-11.
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    4. Thanh Hung Pham & Thi Thanh Hang Hoang & Eleftherios I. Thalassinos & Hoang Anh Le, 2022. "The Impact of Quality of Public Administration on Local Economic Growth in Vietnam," JRFM, MDPI, vol. 15(4), pages 1-13, March.
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    More about this item

    Keywords

    Inflation; economic growth; macroeconomics.;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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