The symmetric effects of inflation, exchange rates, and international trade on Indonesia's balance of payments 2015-2024 based on ARDL

Dyah Ayu  Setianingrum; Rachel Dwitya  Angellita; Priyagung Jati  Pamungkas; Anzar Alfat  Firdaus; Ratna Setyawati Gunawan

doi:10.55942/pssj.v6i3.1111

Authors

Dyah Ayu Setianingrum Universitas Jenderal Soedirman
Rachel Dwitya Angellita Universitas Jenderal Soedirman
Priyagung Jati Pamungkas Universitas Jenderal Soedirman
Anzar Alfat Firdaus Universitas Jenderal Soedirman https://orcid.org/0009-0006-7915-3887
Ratna Setyawati Gunawan Universitas Jenderal Soedirman https://orcid.org/0009-0007-9032-1017

DOI:

https://doi.org/10.55942/pssj.v6i3.1111

Keywords:

ARDL, Balance of payment, Exchange rate, International trade

Abstract

This research utilizes the Autoregressive Distributed Lag (ARDL) approach to examine the symmetrical effects of inflation, exchange rates, and international trade on Indonesia's balance of payments over the period from 2015 to 2024. Amidst global economic instability, exacerbated by the US-China trade war, the persistent pandemic COVID-19, and ongoing geopolitical tensions, the Republic of Indonesia faces significant challenges in maintaining its external balance. This study employs quarterly time series secondary data sourced from Bank Indonesia, Statistics Indonesia (BPS), and the Ministry of Trade. The long-run estimation results indicate a negative correlation between inflation and the balance of payments, with a coefficient of -3468.811 (p=0.059). This means that if inflation goes up a lot, it could make the country's external position worse. The export coefficient, at 2.4342 (p=0.000), indicates a substantial positive impact, whereas the import coefficient, at -2.5669 (p=0.000), signifies a considerable negative effect. The exchange rate's long-term influence appears relatively weak, as evidenced by a coefficient of -0.635 (p=0.082). Short-run estimations reveal that the error correction term (ECT) coefficient is -0.9766 (p=0.000), suggesting a rapid convergence towards long-run equilibrium. These findings carry significant implications for Indonesian economic policy, particularly concerning inflation control and export promotion, both of which are essential for maintaining external stability. Consequently, to enhance the long-term balance of payments, the implementation of prudent monetary and trade policies that foster export expansion while managing import levels is crucial.

Author Biographies

Dyah Ayu Setianingrum, Universitas Jenderal Soedirman

Dyah Ayu Setianingrum is an undergraduate student from the Economics Development study program at Jenderal Soedirman University. She has participated in several academic projects related to Sustainable Economy and Digital Marketing. Her research interests include Monetary Economics, Sustainable Economy, and Regional Economic Development.

Rachel Dwitya Angellita, Universitas Jenderal Soedirman

Rachel Dwitya Angellita is an undergraduate student of the Economics Development study program at Jenderal Soedirman University. She currently participated as Computer Laboratory Assistant. Her academic interests focus on Public Policy, Regional Development, and Environmental Economics.

Priyagung Jati Pamungkas, Universitas Jenderal Soedirman

Priyagung Jati Pamungkas is an undergraduate student from the Economics Development study program at Jenderal Soedirman University. He currently works as Data Analyst Intern in several remote projects. His research interests include Data Analytics, Digital Economy, and Business Development.

Anzar Alfat Firdaus, Universitas Jenderal Soedirman

Anzar graduated from the Economics at Sebelas Maret University. He currently works as a lecturer at the Jenderal Soedirman University in the Economics Development study program, with a research focus on the areas of Financial Stability, Industrial Economy, and Regional Economic Development.

Ratna Setyawati Gunawan, Universitas Jenderal Soedirman

Ratna graduated from the Economics at Gajah Mada University. She currently works as a lecturer at the Jenderal Soedirman University in the Economics Development study program, with a research focus on the Regional Economic Development, Business Empowerment, and Macroeconomic Dynamics.

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