The Difference in Consumption Elasticity on Imports between Indonesia and America


Authors : Dewi Mahrani Rangkuty, Alfian Zulmi

Volume/Issue : Volume 5 - 2020, Issue 1 - January

Google Scholar : https://goo.gl/DF9R4u

Scribd : https://bit.ly/38H8qnU

This article aims to discuss the difference in elasticity to imports and the aggregate consumption between the two countries namely Indonesia and America with time series 1988-2017. Indonesia as a developing country shows that changes in the inflation rate led to a single percent change in Indonesian imports. GDP value changes cause a percent change in Indonesia's aggregate consumption. Whereas in America, foreign exchange reserves, the rate of inflation and consumption is elastic towards American imports. The GDP value, debt interest, and imports are elastic against American aggregate consumption during 1988- 2017. This distinction indicates that in American developed countries more elasticity between economic variables than Indonesia is still developing countries. Recommended to the Government of Indonesia through the Ministry of Trade and Bank Indonesia as a policy determinant to maintain the stability of the rupiah exchange rate in the international market so that the productivity of real sector output can support Acceleration of development and domestic economy because Indonesia is included in one of the emerging market countries for now that seeks to maintain the welfare of the community.

Keywords : Import; Consumption; Elasticity.

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