Dataset for Empirical Evidence of the Causality Relationships between Three Key Macroeconomic Factors in Indonesia 2000 - 2021
Description
The Indonesian economy has been experiencing "deindustrialization" since the mid-2000s. However, the corresponding literature has not developed a consistent or integrated analysis of this process. This study will adopt an empirical approach to simultaneously analyzing three causality relationships: (i) that between the growth of both the manufacturing and non-manufacturing sectors and economic development in Indonesia, (ii) that between the growth of manufacturing and labor, productivity, non-manufacturing productivity, and the economy in Indonesia, and (iii) that between these developments and the macroeconomy. This study aims to identify and understand the transmission channels of the macroeconomic variables responsible for either the expansion of or reduction in manufacturing activity in the period 2000-2021. This, in turn, enables the contribution of the largest macroeconomic variables in terms of their short- and long-term influence on the manufacturing sector in Indonesia to be determined. Using time-series data from the period 2000 to 2021, the authors seek to identify empirical evidence consistent with that provided by previous research indicating the manufacturing sector constitutes a key driver of economic growth. This study incorporates use of a stochastic regression with a linear regression model and a VECM (Vector Error Correction Model) which involve several time-series econometric procedures such as the unit root test, Cointegration test, Linear Regression, Granger Causality test, VECM estimation, Impulse Response function and Decomposition variances.