Analyzing the impact of inflation, exports and unemployment on economic growth in indonesia: A fixed effects least squares dummy variable panel regression approach

Andi Harismahyanti A.; Nur’eni Nur’eni

doi:10.55942/pssj.v5i8.541

Authors

Andi Harismahyanti A. Tadulako University https://orcid.org/0009-0005-1142-3046
Nur’eni Nur’eni Tadulako University https://orcid.org/0000-0002-0565-5191

DOI:

https://doi.org/10.55942/pssj.v5i8.541

Keywords:

inflation, export, unemployment, economic growth, Fixed Effects Model

Abstract

This study explores the impact of inflation, exports, and unemployment on economic growth in Indonesia from 2019 to 2023 using a Fixed Effects Model Least Squares Dummy Variable (FEM LSDV) panel regression approach. The analysis incorporates both province-specific and time-specific effects to provide a comprehensive understanding of the dynamic relationships between these variables and their collective influence on Indonesia's economic growth. The results indicate that exports have a significant positive effect on economic growth, consistent with existing literature highlighting the importance of exports in driving economic performance. In contrast, inflation and unemployment were not found to have statistically significant impacts, possibly due to the model’s focus on regional and temporal variations. The study furthermore reveals significant regional disparities in economic growth, with provinces like DKI Jakarta, Banten, and Kalimantan Timur showing negative growth, while others, such as Sulawesi Selatan and Gorontalo, experienced above-average growth. The FEM LSDV model demonstrates strong explanatory power, with an R-squared value of 0.9162, indicating that it effectively captures the variability in economic growth across regions and over time. The findings suggest that promoting export-driven growth and addressing regional imbalances are key strategies for fostering sustainable economic development in Indonesia.

Author Biographies

Andi Harismahyanti A., Tadulako University

Andi Harismahyanti A. is a lecturer and researcher at the Data Science Study Programme, Tadulako University, Palu, Indonesia. Her research interests focus on econometrics, data science applications in economic modeling, and quantitative approaches to macroeconomic analysis, with particular emphasis on economic growth, inflation, and trade dynamics in developing countries.

Nur’eni Nur’eni, Tadulako University

Nur’eni is a faculty member in the Statistics Study Programme, Tadulako University, Palu, Indonesia. Her expertise lies in applied statistics, panel data modeling, and quantitative methods for economic and financial research. Her work often integrates statistical modeling to analyze macroeconomic indicators and their implications for policy and regional development.

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