Indonesia Accounting Research Journal
Vol. 11 No. 1 (2023): Sep: Accounting, Management

Causality Analysis of Inflation and Economic Growth Using the Error Correction Model (ECM)

Ella Silvia (Universiti Tun Hussein Onn Malaysia)
Netty Vera Sihotang (Universitas Palangkaraya, Kalimantan Tengah, Indonesia)
Demita Sihotang (PT Sawit Sumbermas Sarana Tbk, Kalimantan Tengah, Indonesia)



Article Info

Publish Date
30 Sep 2023

Abstract

This research delves into the relationship between inflation and economic growth, employing the Error Correction Model (ECM) to examine their dynamic interplay. Inflation and economic growth stand as pivotal indicators of economic health, influencing policy decisions, market behaviors, and overall economic stability. Through empirical analysis, this study seeks to unravel the complexities of their relationship to guide policymakers and stakeholders in navigating the economic landscape. Utilizing the ECM, this research investigates the directional relationship between inflation and economic growth, analyzing coefficients and their statistical significance. The findings offer insights into the causal dynamics and the implications for economic policies and market behaviors. The significance of understanding this relationship is evident in the formulation of nuanced economic policies. These findings have implications for monetary and fiscal policies, guiding policymakers in managing inflation while fostering economic growth. Investors, businesses, and financial institutions can leverage this understanding to make informed decisions and manage risks associated with economic fluctuations. The research underlines the importance of adaptable policies that respond to the contextual nuances of the relationship between inflation and economic growth. In conclusion, the research elucidates the vital role that empirical analysis plays in guiding economic policies and shaping economic landscapes. Understanding the intricate relationship between inflation and economic growth offers a roadmap for policymakers, investors, and researchers to navigate the challenges and opportunities within the ever-evolving economic environment

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Journal Info

Abbrev

Accounting

Publisher

Subject

Computer Science & IT Decision Sciences, Operations Research & Management Economics, Econometrics & Finance

Description

The Indonesia Accounting Research Journal (IACRJ) embraces a range of methodological approaches in identifying and solving significant prioritised accounting issues. Submissions are encouraged across all areas on accounting, finance and cognate disciplines. It is strongly recommended that authors ...