Policies that support economic growth

Oct 13, 2025 by magicalceylontours.com 40 views

Introduction

In the realm of economics, savings play a crucial role in the development and growth of a nation. Indonesia, being one of the largest economies in Southeast Asia, has been experiencing a significant increase in savings over the years. However, the factors that influence the level of savings in Indonesia are complex and multifaceted. This study aims to analyze the determinants of savings in Indonesia, specifically focusing on the period from 1985 to 2004. The research will examine the impact of economic growth, interest rates, per capita income, and government expenditure on the level of national savings.

Methodology

The study employed the Ordinary Least Square (OLS) method to analyze the data. The data was collected from various sources, including the Central Bureau of Statistics (BPS) and the International Monetary Fund (IMF). The data processing was done using EViews software version 4.1. The independent variables studied in this research include:

Economic Growth (GDP): This variable measures the growth rate of the Indonesian economy.
Interest Rate (R): This variable represents the interest rate offered by banks in Indonesia.
Per Capita Income (YPC): This variable measures the average income of the Indonesian population.
Government Expenditure (G): This variable represents the amount of money spent by the government on various projects and programs.

The dependent variable analyzed in this study is the national savings level (SAV).

Research Result

The estimation results of the study show that the interest rate variable (R) has a positive influence on the total savings, with a coefficient of 1410.37 ceteris paribus. However, although positive, the influence of this interest rate is not statistically significant. This suggests that although an increase in interest rates can encourage an increase in savings, the effect is not strong enough to significantly affect the time period under study.

On the other hand, the Economic Growth Variable (GDP) has a positive and significant influence at an alpha level of 1% with a coefficient of 0.342 ceteris paribus. This indicates that good economic growth can encourage an increase in community savings. When the economy grows, people's income tends to increase, thus encouraging them to save more.

Furthermore, the government expenditure variable (G) shows a negative and significant effect at an alpha level of 1% with a regression coefficient value of -0.676 ceteris paribus. This suggests that increasing government spending can reduce the level of national savings. The possible cause is when the government issues more budget for spending, this can reduce the surplus that can be invested by the community in the form of savings.

The per capita income variable (YPC) also shows a positive effect with a coefficient value of 0.0014 ceteris paribus. Nevertheless, statistically this value is not significant. This suggests that although there is a tendency that an increase in per capita income will increase savings, the effect is not strong enough to be proven in this study.

Overall Analysis

From the results of the study, it can be concluded that the factors that influence the level of savings in Indonesia are not simple. Economic growth is a significant driver, while government spending actually has a negative impact. Interest rates and per capita income, although they affect, do not show strong significance.

It is essential for the government and policymakers to understand this relationship in order to formulate an effective strategy to increase the level of national savings. For example, policies that support economic growth and controlling government spending can be a strategic step in encouraging people to increase their savings. In this digital era, increasing financial literacy can also be one way to encourage people to be more aware of the importance of saving.

Conclusion

This study provides a deeper insight into the dynamics of savings in Indonesia and the factors that influence it. The findings of this research offer recommendations for better financial and economic policies in the future. By understanding the determinants of savings, policymakers can develop effective strategies to increase the level of national savings, which can contribute to the economic growth and development of Indonesia.

Recommendations

Based on the findings of this study, the following recommendations are made:

Policies that support economic growth: The government should implement policies that support economic growth, such as investing in infrastructure, education, and healthcare.
Controlling government spending: The government should control its spending to avoid reducing the surplus that can be invested by the community in the form of savings.
Increasing financial literacy: The government should increase financial literacy among the population to encourage people to be more aware of the importance of saving.
Interest rate policies: The government should consider implementing policies that encourage people to save more, such as increasing interest rates on savings accounts.

By implementing these recommendations, the government can increase the level of national savings, which can contribute to the economic growth and development of Indonesia.

Introduction

In our previous article, we discussed the determinant analysis affecting savings in Indonesia. We analyzed the factors that influence the level of savings in Indonesia, specifically focusing on the period from 1985 to 2004. In this article, we will answer some of the frequently asked questions related to the study.

Q&A

Q: What are the main factors that influence the level of savings in Indonesia?

A: The main factors that influence the level of savings in Indonesia are economic growth, interest rates, per capita income, and government expenditure.

Q: How does economic growth affect the level of savings in Indonesia?

A: Economic growth has a positive and significant influence on the level of savings in Indonesia. When the economy grows, people's income tends to increase, thus encouraging them to save more.

Q: What is the impact of interest rates on the level of savings in Indonesia?

A: The interest rate variable has a positive influence on the total savings, but it is not statistically significant. This suggests that although an increase in interest rates can encourage an increase in savings, the effect is not strong enough to significantly affect the time period under study.

Q: How does government expenditure affect the level of savings in Indonesia?

A: Government expenditure has a negative and significant effect on the level of savings in Indonesia. Increasing government spending can reduce the level of national savings.

Q: What is the role of per capita income in influencing the level of savings in Indonesia?

A: Per capita income has a positive effect on the level of savings in Indonesia, but it is not statistically significant. This suggests that although there is a tendency that an increase in per capita income will increase savings, the effect is not strong enough to be proven in this study.

Q: What are the implications of the study for policymakers?

A: The study provides policymakers with valuable insights into the factors that influence the level of savings in Indonesia. Policymakers can use this information to develop effective strategies to increase the level of national savings, which can contribute to the economic growth and development of Indonesia.

Q: What are the limitations of the study?

A: The study has several limitations, including the use of a single dataset and the assumption of a linear relationship between the variables. Future studies can build on this research by using more comprehensive datasets and exploring non-linear relationships between the variables.

Q: What are the future research directions?

A: Future research can explore the impact of other factors on the level of savings in Indonesia, such as financial literacy, education, and healthcare. Additionally, researchers can investigate the relationship between savings and other economic indicators, such as GDP and inflation.

Conclusion

This Q&A article provides a summary of the determinant analysis affecting savings in Indonesia. We hope that this article will be helpful to policymakers, researchers, and anyone interested in understanding the factors that influence the level of savings in Indonesia.