Electronic Theses and Dissertation

THE EFFECT OF EXCHANGE RATE AND INTEREST RATE ON
INVESTMENT IN ACEH PROVINCE
By. Maria Ulfah
Supervisors : Prof. Dr. Mohd. Nur Syechalad, MS
Prof. Dr. Abubakar Hamzah
ABSTRACT
Investment is an important factor in a country or region in order to improve its
economy. Investment will increase public spending which will result in far-reaching
effects. Investment in Aceh province is the lowest level in Indonesia. Not only in small
quantities, but also fluctuated over years. Especially, when it is compared to the
national investment from 1984 to 2010. The average of Aceh investment province is
only 2 % of the total Aceh GRDP. This study attempts to show the relationship and the
effect of exchange rates and interest rates on investment in Aceh Province also the
influence of the previous year's investment in current investments. Investigating the
relationship and influence between the variables, the Ordinary Least Square (OLS)
and autoregressive methods is used in this study. The study has shown that the
exchange rates has a little effect on investment in Aceh Province, while interest rate
has no effect on investment in Aceh Province. This situation occurs (especially in Aceh
province) because of the ongoing conflict. It is expected that the study will be
followed by a more focused research again to overcome the limitations of this study.
Keyword : Investment, Exchange Rate, Interest Rate

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