The Influence Of Population, Exchange Rates, and Consumption on National Income in Indonesia

Abstract

Investigating the causal relationships between factors such as population, consumption, exchange rate, and GDP growth in Indonesia is the aim of this study. The World Bank provided secondary data for this study, covering the years 2001 to 2022. This study makes use of the Vector Error Correction Model (VECM) and quantitative techniques. According to this study, economic growth in the past has helped spur contemporary growth. Numerous social and economic facets might be impacted by an increase in population. Changes in exchange rates have a significant impact on how competitive a nation's imports and exports are. Ultimately, home spending plays a major role in driving economic expansion. The population of a nation has a big influence on how much is consumed. The demand for products and services rises with population size. Consequently, there will be a greater consumer market, driving economic growth. However, it should be noted that excessive consumption can also cause problems, such as trade deficits or economic imbalances. Consumption levels also affect currency exchange rates. When consumption is high, countries tend to import more goods and services than they export. As a result, there is a trade deficit, which can lower the country's currency exchange rate. On the other hand, countries with low consumption tend to have stronger exchange rates. GDP (Gross Domestic Product) growth plays an important role in attracting people. When the economy grows, job opportunities increase, and this can attract people to stay or move to the country.