DYNAMICS OF THE INTERDEPENDENCE BETWEEN MACROECONOMIC STABILITY AND POVERTY IN INDONESIA: A MULTI-DIMENSIONAL APPROACH
DOI:
https://doi.org/10.29103/icofeb.v3i1.1293Abstract
This study analyzes the interdependence between macroeconomic stability and poverty in Indonesia using a Vector Autoregression (VAR) approach. Annual time series data from 1990 to 2024 are employed to examine the dynamic relationships among key macroeconomic variables, including GDP growth, inflation, real interest rate, Gini index, final consumption expenditure, and poverty rate. Stationarity tests indicate that all variables are stationary at level. The VAR model with an optimal lag of three is confirmed to be stable based on the characteristic root test. The Granger causality test reveals a unidirectional causal relationship from GDP growth to poverty and from consumption expenditure to GDP growth, as well as a bidirectional relationship between inflation and poverty. The impulse response function (IRF) simulation demonstrates complex dynamic interactions among variables, confirming the sensitivity of poverty to macroeconomic shocks. These findings underscore the importance of an integrated and multidimensional policy approach to addressing poverty while accounting for the dynamics of macroeconomic stability.
Keywords: Macroeconomic Stability, Poverty
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