WSEAS Transactions on Business and Economics
Print ISSN: 1109-9526, E-ISSN: 2224-2899
Volume 12, 2015
The Effect of the Interaction between US Dollar and Euro Exchange Rates on Indonesia’s National Income
Authors: , , , ,
Abstract: Globalization has caused Indonesia’s national income, calculated in Indonesian Rupiah (IDR), cannot be separated from the strong exchange rate of the US dollar (USD) and euro (EUR). This study discussed the effect of the interaction between the USA currency exchange rate (IDR / USD) and the European exchange rate (IDR / EUR) on the Indonesia’s national income from 2004 to 2013. The data of national income were available in the form of quarterly time series (every 3 months). As for the US and European currencies exchange rates, the data were available, in the form of daily time series, except Saturdays, Sundays and national holidays. Data analysis used was causal model lagged variable auto-regression (LVAR). The results showed that there was a negative effect of IDR/USD exchange rate on the national income, there was a positive effect of IDR/EUR exchange rate on the national income, and there was a negative effect of the interaction of both exchange rate IDR/USD and IDR/EUR against the national income. This information is important for the government to consider in its economic policy decision making.
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Pages: 131-137
WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 12, 2015, Art. #13