The dynamic relationship between money supply and economic growth
This study analyzes the influence of the financial sector to economic growth in Indonesia. The variables used are the country's financial sectors which are narrowÂ money (M1), broad money (M2) and money the broadest money (M3),Â with an interest rate as a control variable. Economic growth is represented byÂ Gross Domestic Product and producer price index. The analysis is performedÂ using an Autoregressive Distributed Lag model (ARDL). The stability test isÂ conducted using CUSUM test to see the changes in the structure and the effectÂ of disruption to financial sector development relationship of economic growth.Â ARDL analysis results indicate that the development of the financial sector hasÂ a significant relationship with the country's economic growth. CUSUM analysisÂ results suggest that the relationship of financial sector development-economicÂ growth is stable against changes in economic structure.
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Economic Journal of Emerging Markets (EJEM)
ISSN 2086-3128 (print), ISSN 2502-180X (online)
Center for Economic Studies, Department of Economics,
Universitas Islam Indonesia, Indonesia.
EJEM by http://journal.uii.ac.id/JEP/ is licensed under a Creative Commons Attribution 4.0 International License.