Analysis of Cointegration and VECM of FDI, Labor Force, Government Expenditure and GDP in Indonesia (2005-2019)

Indrajaya, Danang (2021): Analysis of Cointegration and VECM of FDI, Labor Force, Government Expenditure and GDP in Indonesia (2005-2019). Published in: International Journal of Economics Development Research , Vol. 2, No. 1 (4 January 2021): pp. 65-77.

Abstract

This paper studied the effect of labor force, government expenditure and FDI on GDP of Indonesia (2005-2019) by cointegration analysis and VECM. In the short-term, GDP, labor force and government expenditure significantly affect GDP of Indonesia, while FDI does not significantly affect Indonesia’s GDP. However, in the long term, GDP, labor force, government expenditure and FDI have a significant affect GDP of Indonesia. The government must ensure that there are no shocks in GDP, labor force, government expenditure and FDI of Indonesia. Because any shocks that occur in these variables will also have an impact on the GDP of Indonesia.

• Item Type: MPRA Paper
• Language: English
• Keywords: GDP, Labor Force, FDI, Government Expenditure
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E20 - General; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E60 - General; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O49 - Other

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