Proceedings of the 9th International Conference on Accounting, Management, and Economics 2024 (ICAME 2024)

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The Effect of Inflation and Interest Rates on Economic Growth in Indonesia

Authors
Arianto Taliding1, 2, *, Abdul Hamid Paddu2, Anas Iswanto Anwar2, Sabir Sabir2
1Economics Doctoral Program Student, Postgraduate Faculty of Economics and Business, Hasanuddin University, Makassar, Indonesia
2Faculty of Economics and Business, Hasanuddin University, Makassar, Indonesia
*Corresponding author. Email: talidinga22a@student.unhas.ac.id
Corresponding Author
Arianto Taliding
Available Online 30 July 2025.
DOI
10.2991/978-94-6463-758-8_20How to use a DOI?
Keywords
Inflation; Interest Rates; Economic Growth
Abstract

This study aims to examine the impact of inflation and interest rates on economic growth in Indonesia. The research focuses on three key variables: inflation, the BI rate (Bank Indonesia’s benchmark interest rate), and constant Gross Regional Domestic Product (GRDP) data from 2000 to 2023. The data were analyzed using statistical tools such as SPSS and EViews to assess the relationships between these variables. The findings reveal that, simultaneously, inflation and interest rates do not have a significant effect on economic growth, as indicated by an F-probability value greater than 0.05. However, when analyzed partially, inflation demonstrates a positive and significant influence on economic growth, while interest rates exhibit a negative and significant impact. These results suggest that while inflation may stimulate economic activity under certain conditions, higher interest rates tend to hinder growth, likely by increasing borrowing costs and reducing investment. The study provides valuable insights for policymakers in Indonesia, emphasizing the need to carefully balance monetary policies to foster sustainable economic growth. By understanding the distinct effects of inflation and interest rates, stakeholders can develop more effective strategies to navigate economic challenges and promote long-term stability.

Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the 9th International Conference on Accounting, Management, and Economics 2024 (ICAME 2024)
Series
Advances in Economics, Business and Management Research
Publication Date
30 July 2025
ISBN
978-94-6463-758-8
ISSN
2352-5428
DOI
10.2991/978-94-6463-758-8_20How to use a DOI?
Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Arianto Taliding
AU  - Abdul Hamid Paddu
AU  - Anas Iswanto Anwar
AU  - Sabir Sabir
PY  - 2025
DA  - 2025/07/30
TI  - The Effect of Inflation and Interest Rates on Economic Growth in Indonesia
BT  - Proceedings of the 9th International Conference on Accounting, Management, and Economics 2024 (ICAME 2024)
PB  - Atlantis Press
SP  - 214
EP  - 221
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-758-8_20
DO  - 10.2991/978-94-6463-758-8_20
ID  - Taliding2025
ER  -