Fluctuations Oil Prices in World and Their Impact on Indonesian Macroeconomics

• Main Author: Ahmad, Siti Yuliandi
• Format: Proceeding Paper
• Language: English; English; English; English; English
• Published: IPB University 2023
• Subjects: HD72 Economic growth, development, planning
• Online Access: http://irep.iium.edu.my/109018/1/Full%20Paper_VO%2004%2007%20Published.pdf; http://irep.iium.edu.my/109018/2/53-Rev%20LoA-VO%2004%2007.pdf; http://irep.iium.edu.my/109018/3/Full%20Paper_VO%2004%2007%20Published.pdf; http://irep.iium.edu.my/109018/4/Sertifikat%20Vegetable%20oil%20-%20Siti%20Yuliandi%20Ahmad.pdf; http://irep.iium.edu.my/109018/5/Symposium%20Agenda%20of%20The%201st%20VOICe%202023.pdf; http://irep.iium.edu.my/109018/
• Institution: Universiti Islam Antarabangsa Malaysia

Abstract. This study tested the impact of oil price fluctuations on macroeconomic variables in Indonesia. The data used is annual data from 1990 to 2021. They use five macroeconomic variables: economic growth, inflation, interest rates, industrial production, and exchange rates. The impact of oil price fluctuations on GDP, inflation, exchange rates, interest rates, and industrial production indices in Indonesia is examined within a structural vector autoregressive (SVAR) framework. Research shows that oil price shocks significantly impact three variables: GDP, inflation, and exchange rate. The results also show that oil price shocks hurt two other variables, namely the interest rate variable and the industrial production index. The findings derived from the analysis of the impulse response function indicate a detrimental effect on the growth of production, while exerting a favorable influence on inflation. However, the impact on industrial production, interest rates, and exchange rates is very modest and characterized by a degree of uncertainty.