Electronic Theses and Dissertation

ABSTRACT
Title : Inflation and Exchange Rate on Economic Welfare in Indonesia
Author : Farah Najwa Alia
NPM : 2001101010090
Department : Economic Development
Supervisor : Fitriyani, S.E., M.Sc
Concentration : Monetary Economy

This research aims to analyse the short-term and long-term effects of inflation and exchange rate on economic welfare in Indonesia. This research is quantitative research with time series data, from 1980 to 2022. The analysis method uses Autoregressive Distributed Lag (ARDL). The research results show that the inflation variable in the short-term has a significant impact on GDP per capita. This shows that increasing inflation will reduce GDP per capita. Meanwhile, inflation has an insignificant results on GDP per capita. This shows that in the long term, inflation has no long-term relationship or impact on GDP per capita. And the exchange rate variable in the short-term shows that the relationship between the exchange rate and GDP per capita is statistically significant. Meanwhile in the long term, exchange rate variable has an insignificant relationship with GDP per capita. Therefore, the government is expected to be able to control the rate of inflation in Indonesia. Because from the results obtained, inflation has a negative impact on GDP per capita. Apart from that, it is hoped that the government will also pay attention to and balance export and import activities in Indonesia so that economic growth can run well and can have a good impact on economic welfare.

Keywords: Inflation, Exchange Rate, GDP per Capita

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