Analysis Of Factors - Factors Affecting Indonesian Current Transactions For The Period 2006 - 2013

Feb 27, 2025 by ADMIN 99 views

**Analysis of Factors Affecting Indonesian Current Transactions Period 2006-2013**

Introduction

The Indonesian economy has experienced significant growth and development over the past few decades. However, the country's current transactions have been affected by various factors, including interest rates, inflation, economic growth, and exchange rates. This study aims to analyze the factors that influence current transactions in Indonesia during the period 2006 to 2013. Using quarterly data, this study identifies an influential independent variable and examines the relationship between these variables and current transactions.

Methodology

This study uses Ordinary Least Squares (OLS) as the method of data analysis. The OLS method is a widely used statistical technique for estimating the relationship between a dependent variable and one or more independent variables. The study uses quarterly data from 2006 to 2013, which provides a comprehensive picture of the Indonesian economy during this period.

Results

The results of this study show that the coefficient of determination (R²) was 0.45. This means that the independent variables (interest rates, inflation, economic growth, and exchange rate) are able to explain 53% of the variability of the dependent variable, namely the current transaction. The remaining 47% can be explained by other variables that are not included in this study. In addition, the analysis results also show that the F-Statistic value is greater than F-Table (7,911> 2.99), which means that interest rates, economic growth, and exchange rates simultaneously affect current transactions in Indonesia during that period.

In-depth Analysis of Factors Affecting Current Transactions

1. Interest Rates

Interest rates have an important role in influencing investment and consumption. When interest rates increase, loan costs become higher, so as to reduce investment interest by companies and consumption by individuals. This in turn can have an impact on current transactions, especially in the aspect of trade balance. For example, if interest rates increase, companies may reduce their investment in new projects, which can lead to a decrease in imports and an increase in exports. This can result in a positive trade balance and a strong current account.

2. Inflation

Inflation is an indicator that shows the increase in prices of goods and services in a country. High inflation can reduce people's purchasing power, thereby reducing the demand for goods and services, both from within the country and abroad. As a result, the trade balance can be affected, which results in the current transaction. For example, if inflation increases, the price of imports may rise, making them more expensive for consumers. This can lead to a decrease in imports and an increase in exports, resulting in a positive trade balance.

3. Economic Growth

Positive economic growth is usually associated with an increase in community income and purchasing power. High growth can encourage exports, but also increase imports due to increased demand for goods. Therefore, economic growth has a double influence on current transactions. For example, if economic growth increases, companies may invest more in new projects, leading to an increase in imports. However, this can also lead to an increase in exports, as companies may take advantage of the growing demand for their products.

4. Exchange Rate

Fluctuating exchange rates can affect the competitiveness of Indonesian products in the international market. Strengthening exchange rates can make export products more expensive and reduce their appeal in the global market. Conversely, the weakening of the exchange rate can increase the competitiveness of export products, but can also cause higher inflation in the country. For example, if the exchange rate weakens, Indonesian products may become more competitive in the global market, leading to an increase in exports. However, this can also lead to higher inflation, as imports may become more expensive.

Conclusion

In the period 2006 to 2013, Indonesia's current account was influenced by a number of factors, including interest rates, inflation, economic growth, and exchange rates. This study shows that although 53% of variability can be explained by the factors studied, there are still many other variables that affect current transactions that need to be explored further. By understanding these factors, policy makers can design more effective strategies to improve current transaction performance and in turn strengthen Indonesia's economic stability.

Recommendations

Based on the findings of this study, the following recommendations are made:

Monetary Policy: The central bank should maintain a stable interest rate policy to encourage investment and consumption.
Fiscal Policy: The government should implement policies to reduce inflation and promote economic growth.
Exchange Rate Policy: The government should maintain a stable exchange rate policy to promote exports and reduce imports.
Trade Policy: The government should implement policies to promote exports and reduce imports.

By implementing these policies, the government can improve current transaction performance and strengthen Indonesia's economic stability.

Limitations

This study has several limitations. Firstly, the study only examines the factors that affect current transactions in Indonesia during the period 2006 to 2013. Secondly, the study only uses quarterly data, which may not capture the full picture of the Indonesian economy. Finally, the study only examines the relationship between the independent variables and current transactions, and does not examine the relationship between the independent variables and other macroeconomic variables.

Future Research

Future research should examine the relationship between the independent variables and other macroeconomic variables, such as GDP, inflation, and unemployment. Additionally, future research should examine the impact of other factors, such as global economic trends and technological advancements, on current transactions in Indonesia.

References

[1] International Monetary Fund. (2013). World Economic Outlook.
[2] Bank Indonesia. (2013). Annual Report.
[3] World Bank. (2013). World Development Indicators.

Q: What is the main objective of this study?

A: The main objective of this study is to analyze the factors that influence current transactions in Indonesia during the period 2006 to 2013.

Q: What are the independent variables used in this study?

A: The independent variables used in this study are interest rates, inflation, economic growth, and exchange rates.

Q: What is the method of data analysis used in this study?

A: The method of data analysis used in this study is Ordinary Least Squares (OLS).

Q: What is the coefficient of determination (R²) in this study?

A: The coefficient of determination (R²) in this study is 0.45, which means that the independent variables are able to explain 53% of the variability of the dependent variable, namely the current transaction.

Q: What is the F-Statistic value in this study?

A: The F-Statistic value in this study is greater than F-Table (7,911> 2.99), which means that interest rates, economic growth, and exchange rates simultaneously affect current transactions in Indonesia during that period.

Q: What are the implications of this study for policy makers?

A: The implications of this study for policy makers are that they can design more effective strategies to improve current transaction performance and in turn strengthen Indonesia's economic stability.

Q: What are the limitations of this study?

A: The limitations of this study are that it only examines the factors that affect current transactions in Indonesia during the period 2006 to 2013, and it only uses quarterly data.

Q: What are the recommendations of this study for policy makers?

A: The recommendations of this study for policy makers are to maintain a stable interest rate policy, implement policies to reduce inflation and promote economic growth, maintain a stable exchange rate policy, and implement policies to promote exports and reduce imports.

Q: What are the future research directions of this study?

A: The future research directions of this study are to examine the relationship between the independent variables and other macroeconomic variables, such as GDP, inflation, and unemployment, and to examine the impact of other factors, such as global economic trends and technological advancements, on current transactions in Indonesia.

Q: What are the references used in this study?

A: The references used in this study are International Monetary Fund (2013), Bank Indonesia (2013), and World Bank (2013).

Q: What is the significance of this study?

A: The significance of this study is that it provides insights into the factors that affect current transactions in Indonesia during the period 2006 to 2013, and it provides recommendations for policy makers to improve current transaction performance and strengthen Indonesia's economic stability.

Q: What are the implications of this study for the Indonesian economy?

A: The implications of this study for the Indonesian economy are that it can help policy makers to design more effective strategies to improve current transaction performance and in turn strengthen Indonesia's economic stability.

Q: What are the implications of this study for the global economy?

A: The implications of this study for the global economy are that it can provide insights into the factors that affect current transactions in Indonesia, which can have implications for the global economy.

Q: What are the future implications of this study?

A: The future implications of this study are that it can provide insights into the factors that affect current transactions in Indonesia, which can have implications for the Indonesian economy and the global economy.