Application of VECM on livestock production index, carbon dioxide damage, arable land, population growth, and GDP growth in Indonesia

Abstract

Environmental effects due to carbon dioxide in Indonesia tend to increase and arable lands are shrinking. These things are accompanied by population and economic growth, making the need for food higher so that the livestock production index increases. After the economic crisis caused by the subprime mortgage, the livestock production index gradually recovered and increased consistently in 2009-2018. However, it turns out that the contribution of the livestock sector to the economy in 2011-2013 was still below the agricultural and plantation sectors. The purpose of this research was to analyze the cointegration and causality relationship of livestock production index, carbon dioxide damage, arable land, population growth, and GDP growth using the VECM method for time series data from 1970-2018. The results show that there was cointegration between variables. The causality test shows that population growth and carbon dioxide damage affect each other. Meanwhile, the livestock production index on population growth has a one-way causality pattern. Arable land on carbon dioxide damage also has a oneway causality pattern. In general, the VECM model shows that there is a long-term relationship between the variables that were used in this research.