Unemployment in Indonesia: An Empirical Investigation of the Effects of Monetary Policy

Muhammad Devis Susandika

doi:10.32662/golder.v0i0.2604

Unemployment in Indonesia: An Empirical Investigation of the Effects of Monetary Policy

Muhammad Devis Susandika

Abstract

Unemployment is a fairly fundamental problem in the Indonesian economy. The condition of Indonesia's unemployment occurs as a result of the high rate of change in the workforce which is not matched by the existence of ample employment opportunities and the percentage of employment that tends to be small. The research objective in this study was to examine and analyze the influence of monetary policy on the unemployment rate in Indonesia. Monetary policy include real interest rates, and real money supply. The method used was ARDL (Autogressive Distributed Lag) during the 1975-2021 period. The results of the study show that monetary policy do not have a significant effect on the unemployment rate in Indonesia, but economic growth has a significant negative impact on the unemployment rate in Indonesia in the long term, while real interest rates alone have a significant negative effect on the unemployment rate in the short term.

Keywords

Unemployment Rate, Monetary Variable, ARDL

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DOI: https://doi.org/10.32662/golder.v0i0.2604