The Determinants of Consumer Price Index in Indonesia
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THE DETERMINANTS OF CONSUMER PRICE INDEX IN INDONESIA
Instructor
DR. Moussa Larbani
Prepared By Ali Faris (G0912449) Imala Hussain (G0822498) Ma Yue (G0918271) Mia Fathia (G0827756) Nurma Saleah (G0912298) Suthinee Suayngam (G0916798) Ulfah Hidayatun (G0815892)
ECON 6030
ADVANCE QUANTITATIVE METHOD
Term Paper
Kulliyah of Economics and Management Sciences
Department of Business Administration
2009/2010
Abstract
The most well known and widely quoted economic indicator is the CPI (Consumer Price Index). It represents an estimation of the change in prices of consumer goods and services. Generally, it represents a measurement of our expenses on goods and services we use to meet our day-to-day needs. Severe problems to the overall economy can be caused if the prices of consumer goods and services are abruptly changed. This paper attempts to examine the factors that influence the Consumer Price Index. We observe four variables, namely, money supply, gross domestic product, interest rate, and share price. By utilizing quarterly data from 1996 to 2008, this study applies multiple regressions method to find the best model and factors which can explain Consumer Price Index. The result indicates gross domestic product, interest rate, and stock price significant effect to consumer price index, whereas money supply does not have significant effect. This study also finds that the highest Adjusted R2 as goodness criteria of the model is derived when we include all the factors in the model. Hence, we can conclude that those factors have either strong or weak contribution to consumer price index.
Keyword: Consumer Price Index,
1. INTRODUCTION
From the beginning of civilization, tribes, countries and nations have always been looking for ways to attain
THE DETERMINANTS OF CONSUMER PRICE INDEX IN INDONESIA
Instructor
DR. Moussa Larbani
Prepared By Ali Faris (G0912449) Imala Hussain (G0822498) Ma Yue (G0918271) Mia Fathia (G0827756) Nurma Saleah (G0912298) Suthinee Suayngam (G0916798) Ulfah Hidayatun (G0815892)
ECON 6030
ADVANCE QUANTITATIVE METHOD
Term Paper
Kulliyah of Economics and Management Sciences
Department of Business Administration
2009/2010
Abstract
The most well known and widely quoted economic indicator is the CPI (Consumer Price Index). It represents an estimation of the change in prices of consumer goods and services. Generally, it represents a measurement of our expenses on goods and services we use to meet our day-to-day needs. Severe problems to the overall economy can be caused if the prices of consumer goods and services are abruptly changed. This paper attempts to examine the factors that influence the Consumer Price Index. We observe four variables, namely, money supply, gross domestic product, interest rate, and share price. By utilizing quarterly data from 1996 to 2008, this study applies multiple regressions method to find the best model and factors which can explain Consumer Price Index. The result indicates gross domestic product, interest rate, and stock price significant effect to consumer price index, whereas money supply does not have significant effect. This study also finds that the highest Adjusted R2 as goodness criteria of the model is derived when we include all the factors in the model. Hence, we can conclude that those factors have either strong or weak contribution to consumer price index.
Keyword: Consumer Price Index,
1. INTRODUCTION
From the beginning of civilization, tribes, countries and nations have always been looking for ways to attain
References: Lawrence S. Meyers, Glenn Gamst, and A.J. Guarino. (2006). Applied Multivariate Research Design and Interpretation. Thousand Oaks, London, and New Delhi: Sage Publications. Miles, Jeremy and Mark Shevlin. (2001). Applying Regression & Correlation: A Guide for Students and Researchers. London: Sage Publications. Warner, R. M. (2008). Applied Statistics From Bivariate Through Multivariate Techniques. Los Angeles, London, New Delhi, Singapore: SAGE Publications. Watson, Collin J. and et al. (1993). Statistics for Management and Economics 5th Edition. Massachusetts: Allyn and Bacon.