The Effect of Inflation on Income, Investment, and Consumption in East Java Province 2018-2023

Abstract

This study aims to analyze the effect of inflation on income, investment, and consumption in East Java province by using panel data from eight CPI cities in East Java from 2018 to 2023. This study also identifies the factors that mediate and moderate the effect of inflation on income, investment, and consumption in East Java province by using qualitative and dynamic analysis methods. This study uses a panel data regression analysis method with a fixed effect model to test hypotheses and measure the magnitude of the effect of the research variables. This study uses a Stata version 16 computer program to process data and perform panel data regression analysis. The results of this study show that inflation has a positive and significant effect on income and investment, but does not have a significant effect on consumption. The results of this study also show that investment has a negative and significant effect on income, but has a positive and significant effect on investment. The results of this study also show that consumption has a positive and significant effect on investment, but does not affect income and consumption. The results of this study imply that inflation, investment, and consumption have a complex and dynamic relationship in East Java province. This study is expected to contribute to the development of economic theory and practice, especially in East Java province.