Acceleration of investment through the stabilization of money
Abstract: Indonesia downfall
as represented in the economic crisis is due to the inability of the government
to restore the pre-crisis level of investment in 1997. This could happen
although the government has enforced Law No. 1 of 1967 Jo No 11 of 1970 on
Foreign Direct Investment (FDI) and Law No. 6 Years 1968 Jo No 12 Year 1978 on
Domestic Investment (DCI). This study attempts to reveal whether the investment
is quite effective in accelerating investment through the stabilization of
money. This is very important because the stabilization of money can raise
investments, which finally affect greatly the condition of the state economy.
The data were collected from 1970 to 2012. Econometric model is employed for
testing the hypotheses because it can handle the mutual dependence
(interdependence). Besides that, econometric model is an invaluable tool for
understanding the way the economic system works and so to test and evaluate
policy alternatives. Hypothesis is tested using multiple regressions with Two
Stages Least Square method. The result shows that the stabilization of money
could accelerate the investment by looking at the intermediate indicators on
the exchange rate. However, it cannot be seen through the indicators of
inflation.
Author: Sriyono
Journal Code: jpakuntansigg140039
