A Model of the Dynamics of the Effect of World Crude Oil Price and World Rice Price on Indonesia’s Inflation Rate

This study aims to investigate the dynamics of the effects of world crude oil prices and world rice prices on Indonesia’s inflation rate in the period between January 2004 and September 2015. Monthly time series data spanning from January 2004 to September 2015 are analyzed using difference equation model as the econometric tool. Test result shows that there existed a dynamic effect of world oil crude prices and world rice prices on inflation rate in Indonesia. The World crude oil prices positively affected the inflation rate in that each 1% increase (decrease) in the world crude oil prices caused the inflation rate to go up (drop) by 0.33%. The world rice prices also positively affected the inflation rate, where each 1% increase (decrease) in world rice prices was followed by a 0.52% rise (fall) of the inflation rate.

Issue Date:
Mar 30 2016
Publication Type:
Journal Article
DOI and Other Identifiers:
ISSN: 1804-1930 (Other)
PURL Identifier:
Published in:
AGRIS on-line Papers in Economics and Informatics, Volume 08, Number 1
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Total Pages:
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 Record created 2017-04-01, last modified 2017-04-27

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