Trade openness, exchange rate, gross domestic investment, and growth in Indonesia

This study examines the relationships among economic growth, domestic investment, real exchange rate, and trade openness in Indonesia. We carried out the unit root test, the Johansen co-integration test and then estimated the VEC model. The results suggest that there exists a long-run relationshi...

Full description

Bibliographic Details
Main Authors:	Yusoff, Mohammed, ., Ilza Febrina
Format:	Conference or Workshop Item
Language:	English
Published:	2012
Subjects:	HF3000 By region or country
Online Access:	http://irep.iium.edu.my/24473/ http://irep.iium.edu.my/24473/ http://irep.iium.edu.my/24473/1/Trade_Openness%2C_Exchange_Rate%2C_Gross-.pdf

id	iium-24473
recordtype	eprints
spelling	iium-244732012-11-06T11:28:39Z http://irep.iium.edu.my/24473/ Trade openness, exchange rate, gross domestic investment, and growth in Indonesia Yusoff, Mohammed ., Ilza Febrina HF3000 By region or country This study examines the relationships among economic growth, domestic investment, real exchange rate, and trade openness in Indonesia. We carried out the unit root test, the Johansen co-integration test and then estimated the VEC model. The results suggest that there exists a long-run relationship among the variables. All the estimated coefficients of the long run equation have the correct positive signs and significant at least at 5 percent level. Specifically, a one percent increase in trade openness leads to about 26.5 percent increase in Indonesian real GDP in the long-run; a one percent increase in domestic investment will spur GDP by 1.8 percent, and a one percent depreciation of rupiah promotes GDP by about 6.4 percent in the long-run. The results of Granger causality test using VECM suggest that all the variables cause real GDP in the short-run. Both the trade openness and gross domestic investment cause growth unidirectionally in short-run, except for real exchange rate. The evidence suggests that trade openness, GDI and exchange rate are important determinants of economic growth. And therefore policy makers should seriously take these variables into account in their policy construct in order to sustain economic growth in Indonesia. Specifically, Indonesia should promote foreign trade, improve the domestic investment climate, and maintain exchange rate stability. 2012-05-03 Conference or Workshop Item PeerReviewed application/pdf en http://irep.iium.edu.my/24473/1/Trade_Openness%2C_Exchange_Rate%2C_Gross-.pdf Yusoff, Mohammed and ., Ilza Febrina (2012) Trade openness, exchange rate, gross domestic investment, and growth in Indonesia. In: The Asian Conference on the Social Sciences 2012, 3-6 May 2012, Osaka, Japan. http://iafor.org/acss2012_offprints/ACSS2012_offprint_0108.pdf
repository_type	Digital Repository
institution_category	Local University
institution	International Islamic University Malaysia
building	IIUM Repository
collection	Online Access
language	English
topic	HF3000 By region or country
spellingShingle	HF3000 By region or country Yusoff, Mohammed ., Ilza Febrina Trade openness, exchange rate, gross domestic investment, and growth in Indonesia
description	This study examines the relationships among economic growth, domestic investment, real exchange rate, and trade openness in Indonesia. We carried out the unit root test, the Johansen co-integration test and then estimated the VEC model. The results suggest that there exists a long-run relationship among the variables. All the estimated coefficients of the long run equation have the correct positive signs and significant at least at 5 percent level. Specifically, a one percent increase in trade openness leads to about 26.5 percent increase in Indonesian real GDP in the long-run; a one percent increase in domestic investment will spur GDP by 1.8 percent, and a one percent depreciation of rupiah promotes GDP by about 6.4 percent in the long-run. The results of Granger causality test using VECM suggest that all the variables cause real GDP in the short-run. Both the trade openness and gross domestic investment cause growth unidirectionally in short-run, except for real exchange rate. The evidence suggests that trade openness, GDI and exchange rate are important determinants of economic growth. And therefore policy makers should seriously take these variables into account in their policy construct in order to sustain economic growth in Indonesia. Specifically, Indonesia should promote foreign trade, improve the domestic investment climate, and maintain exchange rate stability.
format	Conference or Workshop Item
author	Yusoff, Mohammed ., Ilza Febrina
author_facet	Yusoff, Mohammed ., Ilza Febrina
author_sort	Yusoff, Mohammed
title	Trade openness, exchange rate, gross domestic investment, and growth in Indonesia
title_short	Trade openness, exchange rate, gross domestic investment, and growth in Indonesia
title_full	Trade openness, exchange rate, gross domestic investment, and growth in Indonesia
title_fullStr	Trade openness, exchange rate, gross domestic investment, and growth in Indonesia
title_full_unstemmed	Trade openness, exchange rate, gross domestic investment, and growth in Indonesia
title_sort	trade openness, exchange rate, gross domestic investment, and growth in indonesia
publishDate	2012
url	http://irep.iium.edu.my/24473/ http://irep.iium.edu.my/24473/ http://irep.iium.edu.my/24473/1/Trade_Openness%2C_Exchange_Rate%2C_Gross-.pdf
first_indexed	2023-09-18T20:36:42Z
last_indexed	2023-09-18T20:36:42Z
_version_	1777409093327126528

Trade openness, exchange rate, gross domestic investment, and growth in Indonesia

Similar Items