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探索商业周期的影响paper
商业周期是是用来测试实际国内生产总值（GDP）的总体经济活动的非对称波动，它涉及经济，民间消费，政府支出投资和净出口所产生的市场价格，产品和服务。在一个完整的经济周期共有四个阶段，包括经济衰退，谷底，扩张和顶峰。经济衰退至少发生在实际国内生产总值下降的三个月期间。在一个商业周期，总体经济活动下降的收缩也被称为经济衰退达到谷底。槽后，膨胀活性增加或吊杆，直到它达到峰值。该序列从一个峰到下一个峰，或从一个槽到下一个槽，是一个商业周期。
据绍斯塔克（2003年）报道，商业周期影响如就业，利润，工作时间，而且往往影响到价格和工资。所有这些可能会影响人们的生活水平。当经济衰退，人们会失去他们的大量收入。经济周期的这种负面影响会导致失业。
Exploring The Impact Of Business Cycles
Business cycles are the asymmetrical fluctuations in aggregate economic activity which is use to measured real gross domestic product (GDP), it involve the market prices, goods and services produced in the economy, private consumption, government expenditures investment and net export. There are four stages in a complete business cycle which are recession, trough, expansion and peak. Recession is commonly measured in at least two set of three-month periods which real GDP falls. In a business cycle, aggregate economic activity declines in a contraction which is also known as recession and it reaches a trough. After a trough, activity increases in an expansion or boom until it reaches a peak. The sequence from one peak to the next, or from one trough to the next, is a business cycle.
According to Szostak (2003), business cycles affect variables such as employment, profits, hours of work, and often prices and wages. All these may affect people’s living standard. When recession, there will be great number of people loses their income. This negative effect from business cycle causes unemployment. Furthermore, this can affect other noneconomic variables, including decision about marriage and having children because all this are living cost. Other than that, it may also affect mental and health because of the pressure from their life.
The “business cycle” is a broad term that connotes the natural fluctuations in economic activity. Research on the measurement of business cycles has a long tradition in macroeconomics, with an early example provided by Wesley Mitchell (1927), the founder of the National Bureau of Economic Research (NBER) who defined business cycle in terms of the alternation between periods of expansion and recession in the level of economic activity. There will be other alternative definition is that the business cycle represents transitory fluctuations in economic activity around a permanent or “trend” level. This definition is propose by Beveridge and Nelson (1981), who proposes a general approach to measuring the business cycle based on long-horizon forecasts produced by a time series forecasting model.
According to Mitchell (1927), the phases in the business cycle are linked by a causal relation. The prosperity produces condition which lead to crises, crises turn into depression and after some time, there will be a recovery from the recession. There is a problem where economies with empirically reasonable preferences and technologies do not generate deterministic business cycle.
Private consumption is one of the variables to be examined in this empirical study. The consumption habit can explain the movement in the business cycle. According to Richard Dennis (2008), either an internal or external of consumption habit will effect on the business cycle characteristic.
Recently, Devereux, Head and Lapham (DHL, 1996) have explored the macroeconomic effects of changes in government spending in a real business cycle (RBC) model with increasing returns and monopolistic competition. A positive government spending shock can increase the country output level, consumption, investment, employment and real wage. This result is driven by the endogenous response of total factor productivity to a change in government spending, and this will affect the fluctuation of the business cycle.
From a study of Jamee K. Moudud (1999), government spending can be divided into two types: consumption spending which are expenses in goods and services and public investment spending which are expenditures on infrastructure, education, public health, research and development, and other expenditures that are conducive to raising business productivity. This empirical study also found that a rise in government spending significantly help to reduce business costs and improves business profitability, thereby raising the long-run growth rate for the economy.
International trade is also an economic activity that will affect the fluctuation of the business cycle. According to the study by W. Jos Jansen and Ad C.J. Stokman (2004), the trade in goods and services between countries is the ‘traditional’ channel through which economies may affect each trade partner. A positive net export may increase the GDP. Other than that, the deeper trade interdependencies have contributed significantly to the rise of output level, this will be the factor affecting the fluctuation of both trading partner,
Problem Statement
Business cycle fluctuation consists of recession, trough, expansion and peak. These are the stages in business cycle. A huge fluctuation may cause a negative effect. Government face problem on how to intervene to reduce the fluctuation. Other than that, if all the stages remain in long period, it will negatively affect the economy. For example, if a country falls into recession in a long term, the wealth of the country will reduce. The country may face a high unemployment rate. Furthermore, there will also be an external problem. When government borrows money from other countries to finance the home country, it may increase its debt. Long term recession may lead to large amount of budget deficit to the country. Exchange rate of the country also drops and causes the value of the money to decrease.
Moreover, long term expansion also will cause negative effect to a country’s economy. Too much capital will turn a healthy expansion to a peak. Price of goods and services will increase and this will cause demand pull inflation. When this happened, the growth in GDP is no more a healthy growth. That is only the price of goods and services increase but not the productivity. These are bad impact for a country.
1.3 Objectives of Study
This study aimed to investigate how business cycle was affected by specific variables which are private consumption, government expenditure, investment and international trade. It is important to identify the factors that affect business cycle so that government can intervene and reduce the fluctuation of the business cycle. Through this study, it can also help the government to intervene all these activities to maintain the performance of the economy. For example, government should spend more during recession to keep up the economy.
In addition, this study also intends to develop some solutions to reduce the fluctuation of the business cycle. Finally, this is an empirical study of economic activities that affect business cycle. It is expected that this study will achieve the research objective and underline the issues that related to the business cycle.
1.4 Significance of Study
This study will be able to provide precious information to forecast the business cycle fluctuation. It will also present the government with an idea on how the business cycles fluctuate in a time period. When government has an idea on how to intervene in the fluctuation of the business cycle, it may lead to a better economy performance in a country due to the increase in production. Other than that, increase in national income and Gross Domestic Product (GDP) means more income and a better quality of life for all.
This study also will help to decrease the social problem cause by economy downturn when government intervenes to maintain the performance of the country’s income and GDP. This will provide the society with better quality of life. The country will also become wealthier when government can reduce the period of recession in the business cycle. On the other hand, it can increase the period of recovery and keep up in the peak. A wealthy country always has a better social structure and this reduce many internal problems of that country.
Furthermore, this finding will be able to help the government to adopt new policy to solve all the problems to reduce the time period of economic downturn.
1.5 Organization of study
This study will have 3 chapters and every chapter has specific information for this research topic, “How Economic Activities Affect Business Cycle”.
In chapter 1, there will be an introduction of the research. This chapter also discusses the variables used in the research which are private consumption, government expenditure, investment and international trade that will affect the business cycle fluctuation.
In Chapter 2, it is the literature review section, which the problem statement will be support by the collected secondary data. Firstly, the term “business cycle” will be defined. Secondly, this chapter also discusses the variables that will affect business cycle, which are the most current issue that affect the fluctuation of the business cycle and also the existence of the problem. After that, the effects that may rise from the problem will be discussed. Variables that examined in Chapter 2 are private consumption, investment, and international trade and government expenditures.#p#分页标题#e#
Chapter 3 will briefly describe the theoretical framework, sources of data, data collection and methodology. Theoretical framework shows the independent variables and dependant variable in this study. Sources of data and data collection explain the way of collecting data and types of data. The last part of chapter 3 will explain the methods that will use in this study.
Chapter 2
2.1 Definition of business cycle
According to Parkin-Bade economics (Avi Jonathan Cohen, 1997), business cycle is measured by the variation of real GDP and others economic variables. Business cycle is irregular and unpredictable of its up-and-down movements. A business cycle is identified as a sequence of four phases which are contraction, trough, expansion and peak.
New Keynesian theory (Bernanke and Carey, 1996) argues that the volatility of aggregate demand and supply will affect the business cycle. In short run, aggregate demand for both prices and output will increase, but prices increase modestly relative to demand, as labor cost is not completely flexible (i.e. stickiness of nominal wages). This is because of factors such as contracts, menu cost, and near rationality, the situation can experience in the imperfect market. As the price level increases due to increased money supply but real wages decline, at the same time, employment and output will increase. Positive aggregate supply shocks, generated by a decline in oil prices and improvement in technology, reduce marginal costs and increase the aggregate supply. But negative supply shocks tend to increase marginal cost and reduce aggregate supply, generating an economic downturn. Similarly, a decline in consumption and investment expenditures generate a recession, because as the aggregate demand decreases, prices do not decline rapidly. Consequently, real wages will increase, causing a decline in employment and output. Decrease in output may affect the business cycle.
According to Burns and Mitchell (1945), “expansions occurring at about the same time in many economic activities, followed by similarly general recessions, contractions and revivals which merge into the expansion phase of the next cycle; this sequence of changes is recurrent but not periodic”
2.2 Economic activities that affect business cycle
Business cycle instability can occur from a mixture of sources and be exacerbated by different economic policy regimes, perhaps reflecting slowly-evolving institutional factors (Acemoglu, Johnson, Robinson and Thaicharoe, 2003) and different degrees of financial and trade openness (Kose, Prasad, and Terrones 2006).
2.2.1 Private consumption
Barro and Ursua (2008), observe international evidence on output production and private consumption to study the response of consumption to output production. Their preliminary results suggest that private consumption was reacted rather strongly to output production when compared to the prediction of consumption asset pricing models. However, their methodology does not provide for measurement of multivariate cross-country effects of macroeconomic shocks on national consumption levels. Albrecht Ritschl, Samad Sarferaz and Martin Uebele (2008) argue that from the dynamic approach, they observe the effects of dissimilarity in the common mechanism on individual output and consumption series. They found out there was weak evidence of increased international co-movement of consumption and output production. Counter to theoretical prediction, consumption is even less integrated internationally than the output production.
Satoshi Urasawa (2007) discover that private consumption is pro-cyclical, possibly with a lead, implying that private consumption might predict fluctuation in output, rather than output predicting consumption as suggested by the traditional Keynesian model. That consumption might have a significant impact on business cycle. In the 1980s, private consumption played an important role in powering Japan’s strong economy. In contrast, since 1991 sluggish consumption due to uncertainty over the future has had a very negative force.
Refer to Bimal Singh (2004), private consumption expenditure is the largest component of the nation’s Gross Domestic Products (GDP) in Fiji, it consists of around two-thirds of the country GDP. Private Consumption between 1979 and 2001 has listed the averaged around 65 percent of GDP annually in the country. This makes private consumption in Fiji an extremely important component of aggregate demand, not only because it influences economic growth, but also in the determination of the business cycle. The consumption function has featured in macro-models. It will affect the fluctuation in the business cycle.
According to Deutsche Bundesbank, monthly reports (2007), the cyclical pattern of real private consumption expenditure is closely related to the growth of real GDP. At the same time, the sensitivity of these two variables to cyclical fluctuations has tended to decline in a long-term view. Looking at the period from 1970 to 2006, neither GDP nor private consumption had a clear lead on the other. The cyclical dynamics of macroeconomic activity and consumption are therefore marked by a high co-movement. However, there have repeatedly been phases in which one variable was ahead of the other. For example, the downswing of private consumption towards the middle of the 1970s in the wake of the first oil price shock preceded that of GDP, as did the ensuing recovery. Conversely, macroeconomic activity led the expansion of private consumption both in the late 1980s and in the mid-1990s. The current phase of robust economic expansion has likewise not yet been followed by a corresponding increase in private consumption.
2.2.2 Investment
Martin A. Armstrong (1999) stated that when the G5 discuss about the US dollar down by 40% between 1985 and 1987, it basically was telling foreign investor to get out. At the end, it causes the US business cycle downturn. In the case of Japan, as the Japanese took their money for domestic investment, the value of their currency increased rapidly. They were also enabled to attract foreign investment as well. Everyone was there in Tokyo in late 1989. Just about every investment fund manager globally was touting the virtues of Japan. As the Japanese bubble peaked, capital had acquired a taste for foreign investment. This happened to help to increase the performance in their business cycle.
Satoshi Urasawa (2007) stated that private non-residential investment is strongly pro-cyclical with a lag, while interestingly, private residential investment is pro-cyclical with a lead of two quarters [1] . It has an intimate relationship with output in each recovery and recession period in the business cycle. In contrast, public investment is counter-cyclical with a lag. This is because public investment in this period is made as a reaction to stabilize the economy.
Jyun-Yi Wu?, Ruey Yau, Chih-Chiang Hsu (2009) suggest that foreign direct investment might be another important factor for business cycle correlation patterns. FDI has increased dramatically since the 1980s. Figure 1 shows the FDI inflows and outflows as a share of GDP among the G7 countries (Canada, France, Germany, Italy, Japan, the U.K. and the U.S.) and the world in different years [2] . For the world, we find that inward FDI as a share of GDP increased from 0.50% in 1980 to 4.39% in 2000. The share of GDP accounted for by outward FDI for the world increased from 0.51% in 1980 to 3.53% in 2000. For the G7 countries, both inward and outward of FDI have grown more than five times over these two decades. Although Japan’s inward and outward FDI were very low in 2000, being only 0.17% and 0.67%, respectively, it is still important to take into account the role of FDI in business cycle co- movements.
source: Jyun-Yi Wu?, Ruey Yau, Chih-Chiang Hsu , (2009), “Foreign Direct Investment and Business Cycle Co-movements: The Panel Data Evidence. Department of Economics, National Central University
Jansen and Stockman (2004) used aggregate data on bilateral FDI among OECD countries and suggest that countries with tighter FDI linkages also have more correlated business cycles but stated that the effect of FDI is smaller than bilateral trade.
2.2.3 Government Expenditure
Dar & Amir Khalkhali (2002) stated that government overspend would have a negative impact for the economic growth. Peter Sjoberg (2003) studies the case of Sweden about changes in government expenditure and GDP growth as shown in Figure 2. The figure shows that trends of the government expenditure and GDP growth rate are moving in an inverse direction. These verify that larger amount of government spend, cause the GDP growth rate to decline. (Norberg 2001) stated this could be a problem for the country because the falls of GDP may reduce the level of living standard for the country’s citizens. Then the government should not overspend to maintain the GDP growth rate.
Figure 2: GDP growth and government expenditure in Sweden (1960-2001)
Source: Peter Sjoberg, (2003) “Government Expenditure Effect on Economic Growth
There are several studies on the impact of government spending and economic growth rate. The results show that it was negative relationship between the two variables (Barro 2008). This study support that when the government spending is over a limit, it cause the GDP growth rate to decrease. Another study that carried out by Landau (1983) with the sample of ninety-six countries had concluded there was a negative relationship between government spending and growth in national output.#p#分页标题#e#
Based on the study of Abbas Valadkhani (1993), government capital expenditure had played an important role on affecting GDP growth, irrespective of the structural changes and regime shifts in the period under study.
From an empirical study, there was a relationship between the government expenditure and GDP in late 19th century and it was known as Wagner’s “law”, which describes that as per capita income increase; public sector’s importance will grow (Bird, 1971). Meltzer and Richard (1981) had stated their model and say that “government spending is undertaken to satisfy the median voter, which would generate a relationship between economic growth and government expenditure if the position of the decisive median voter in the income distribution shifts towards the lower end. For example, as economy grows incomes of skilled workers might increase much more than the incomes of unskilled workers, leading to increased inequality.”
2.2.4 International Trade
The world economy had become more integrated in recent years. This is because of the gain in international trade and also financial flows among countries. More and more countries are open to trade with other countries so they may gain among each others. All this could have a greater influence on the business cycle fluctuation. Chanda (2001) uses an index of capital account openness to show that more developing countries have suffered from globalization than not, while Rodrik (1998) found no effect of capital account openness on economic growth.
In relevant studies, Jong (2001) says that the greater correlation of Asian business cycle is caused by the increase of mutual trade confidence among countries. In addition, Shin and Wang (2002) highlights the business cycle fluctuations is because of the increase of intra-industry trade but not the trade alone. Eichengreen (1992) and Krugman (1993) explain that business cycles may affect by trade integration only if intra-industry trade accounts for most trade. Conversely, if tighter trade integration boosts higher inter-industry trade resulting in higher specialization in industries, the sector-specific shocks may become region-specific shocks and thereby increase the possibility of asymmetric changes in business cycles.
Frankel and Rose (1998) state that countries with closer trade links tend to have more tightly correlated business cycles. Frankel and Rose also say that “country pairs that trade more with each other experience higher business cycle correlation.” Baxter and Kouparitsas (2005) and Abbott et al. (2008) also arrive at similar conclusions whereby intense bilateral trade tends to result in a high degree of synchronization among business cycles. According to the theoretical literature, the impact of trade integration on business cycle correlation could have this situation. One of them is if the demand side is the leading force driving business cycles, we expect trade integration to increase the business cycle correlation. As a result, positive output shocks in a country might increase its demand for foreign goods. The impact of this shock on the business cycle of the country’s trading partners should depend on the depth of the trading among all the partners. The second situation is if industry-specific shocks are the leading force in explaining cyclical output, the relationship would be negative if increasing specialization in production leads to inter-industry trade. This can usually observed in developing country.
Dollar (1992) analyzed the relationship between economic performance and openness to trade, those between growth and actual flows. Both of the results show that mutually openness to trade and actual trade flows are strongly connected to growth.
Chapter 3
3.1 Research Methodology
Research methodology is the analysis of the principles of methods, rules and hypothesis. It is also known as a systematic study of methods that have been applied within a discipline. Research can also defined as an organized and systematic way of finding answers to questions.
3.2 Theoretical Framework
Independent variables
Economy Activities
Private consumption
Government expenditures
Investment
International trade
In this research, the dependent variable is real GDP which use to compute business cycle. The independent variables are those factors like private consumption, government expenditures, investment and international trade. Beside, determine the activities that will affect the business cycle fluctuation.
Dependent variable
Real GDP
3.3 Sources of Data
This research will use secondary data. Secondary data is information that gathered by someone other than the user and compiled into statistical statements. It used by the researchers to gain initial insight into the research problem.
3.4 Data Collection
The data collected in this research is from DataStream. From the DataStream, it was able to download the secondary data which are private consumption, government expenditures, investment and net export. All these are variables using in this study.
3.5 Methodology and Model
3.5.1 Ordinary Lease Square (OLS) Linear Regression Model
Ordinary Least Squares (OLS) is typically used to estimate the relationship between a dependent variable and one or more independent variables. Ordinary Lease Square model is to minimize Residual Sum of Squares and follow the assumptions of the classical linear regression model, OLS estimators are Best Linear Unbiased Estimators (BLUE). The linear regression model is specific as:
ln RGDP = C + α1 ln P + α2 ln I + α3 ln G + α4 ln T + εi
ln is logarithm; RGDP is real gross domestic product; C is constant value; P is private consumption; I is investment; G is government expenditures; T is international trade and εi is a disturbance term.
3.5.2 Unit Root Test
A unit root test is a statistical test for the proposition that in an autoregressive statistical model of a time series, the autoregressive parameter is one. This statistical test is used to examine the stationarity of the data. If these variables are non-stationary, the use of OLS regression test will produce invalid estimates. Therefore cointegration techniques can be used to model these long-run relations when variables are non-stationary.
3.5.3 Detrending Techniques
When the data is non-stationary, it will cause OLS regression test indicate bias result. Therefore detrending techniques is required to remove the linear trend in order to transform non-stationary become stationary.
Chapter 4
4.1 Unit Root Test
Table 4.1.1 Unit Root Test at Logarithmic levels and First differences
Notes: ** denotes significance at the 5% level, *** denotes significance at 1% significance level and the rejection of the null hypothesis of non-stationary.
The results of the test for all variables are presented in the table 4.1.1, first of their logarithmic levels and then for their first differences. The results indicate that each of the series is non-stationary when the variables defined in levels. But first-differencing the series removes the non-stationary components in all variables except government spending. The null hypothesis is clearly rejected in 1% significance level for GDP, private consumption and net export. Investment is rejected in 5 % significance level.
4.2 Detrending Techniques - Hodrick-Prescott Filter
Hodrick-Prescott Filter is to decompose a time series into it’s high and low frequency components. In other words, this detrending technique is to remove the trend from a time series component.
Figure 3: GDP
Figure 4: Private Consumption
Figure 5: Government Spending
Figure 6: Investment
Figure 7: Net export
From the graphs above, all of the trends from original data had removed by Hodrick-Prescott Filter. Before detrending process, the flow of trend of GDP, private consumption, government spending and investment are difficult to observe, because the movement of trend of the variables are captured by the time trend due to increasing over time. It means that amount of GDP, private consumption, government spending and invest is increasing and accumulated from year to year. This will cause the difficulty to observe whether the value is increase or decrease. After detrending process, it shows the fluctuation in the graphs of GDP, private consumption, government spending and investment. Except the net export, the result is quite similar with the original data, but it had shown a cycle from the original data.
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Coefficient of model: ln GDP = 0.0000000000000259 +0.848881 ln C + 0.122249ln I -
0.074003ln G + 0.317633ln Ex
The Regression result have shown than, the independence variables that will affect the most towards the dependent variable, which is private consumption, investment and international trade. Surprisingly, government expenditure has no effect towards GDP which is the variable to compute business cycle. R2 is Percentage of total variation in dependent variable is explained by all of the independent variables. R2 = 0.904096 means that 90.41% of variation in GDP is explained by private consumption, investment and international trade. The F Statistics is Joint Hypothesis Test, and the result has shown that it is significant at 1% significant level. Therefore, at least one of the coefficients of independent variable is not equals to zero.
Private consumption is one of the components to compute nation’s GDP, as private consumption increase, the GDP will increase. Here, the result shows the private consumption has positive relationship with GDP at 1% significance level. 1% increase in private consumption will increase 0.8489% of nation’s GDP. When private sectors consume more, it will contribute to the economic growth. The result shows that private consumption has strong relationship (0.8489) with GDP. Therefore, private consumption is an important component in affecting a nation’s GDP growth. The regression output also shows that international trade is significance at 1%. When there is 1% increase in international trade, GDP will increase 0.3176%. This shows that international trade has positive relationship with nation’s GDP. International trade will promote economic growth in two ways. First was improved the optimal distribution of resources and productivity consequentially and then stimulated the economic growth. Other than that, country could gain raw materials and equipments which it could not produce locally. Those provided basics for economic development. The most famous theories were exports of surplus of Adam Smith and comparative advantage of David Ricardo. Export the surplus of domestic goods to foreign countries and trade for other goods that is demanded so that country can gain in trade. All these theories interpreted the relationship between the international trade and nation’s GDP.
Furthermore, the result also shows that investment has positive relationship with GDP at 10% significance level. 1% increase in investment will increase 0.1222% in GDP. Foreign direct investment is important for economic growth. Country that can attract more FDI will able to reduce their unemployment rate. This will improve the economy because people have more jobs opportunity. Therefore, standard of living will also get better. A developing country needs more FDI so that new technology and labors skill can be improved and leads to an economic growth.
Surprisingly, result shows that government expenditures do not significance with GDP. This is because the government spending is always on producing raw materials and crude oil. All the Intermediate goods are not counted in a country's GDP, as that would mean double counting, as the final product only should be counted.
Chapter 5
5.1 Conclusion
This research is to study how business cycle affected by the economy activities. According to the theoretical framework in this research, the model used to examine the relationship between the business cycle and the economy activities which is private consumption, foreign direct investment, government expenditures and international trade. By using the econometric techniques, the Unit Root Test has demonstrated some of the variables became stationary after first differentiated. Therefore, the Ordinary Lease Square (OLS) regression will be valid in estimation. On the other hand, the Hodrick-Prescott Filter has succeeded to remove the unobservable trend of variables, so that it shows a cycle from each variable. Based on the empirical result of OLS regression output, private consumption has the strongest and positive relationship with the business cycle compare with the others independent variables.
In conclusion, higher consumption in Malaysia will lead to economy growth. Higher private spending also shows that Malaysians’ living standard had increased. Follow by international trade also helps in Malaysia economy which is a developing country. The other variable, investment also will promote the Malaysia’s economy growth. Government should maintain the interest rate of Malaysia to encourage investors to invest more in Malaysia.
5.2 Discussion and Recommendation
Private consumption is the main factor in this research. It will affect the Malaysia cycle. Therefore, when there is economy downturn, government should encourage consumer to spend more and boost up the economy. In the other way, government should also control the money supply so that people are not over spent and cause inflation. Other than that, Malaysia also should promote their trade which export the surplus of goods to trade for good that are demanded in domestic. Furthermore, Malaysia should also attract more foreign direct investment. This will not only lead to an economy growth in Malaysia, it will also decrease the unemployment rate in Malaysia, because when foreigners invest in Malaysia, it creates jobs opportunities for the domestic workers. Lastly, this research shows that government expenditures do not affect the business cycle of Malaysia. For my opinion, government should intervene in the economy with proper policy. For example, use monetary policy to control the inflation in the country. When there is economy downturn, government should use expansionary monetary policy. Government intervention may helps to keep the business cycle at peak with longer period and decrease the time of recession.
5.3 Limitation
During this research, there is lack of observation due to the annual data is using in this research. Secondary data that collected may influence by some others factors. Other than that, the lack of frequency of data may cause the causal effect to dependent variable is not able to capture real effect of determinants. Therefore, the quarterly and monthly data are preferred to apply to further in next research.
Additionally, the econometrics test that conducted in this research is insufficient such as co-integration test. Co-integration test is using to explain the long run relationship between dependent variable and independent variables. But, there are lack of information and technique to apply the co-integration test in this research.
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