Investigating the Effect of Property Investment and Inflation on Economic Growth in Indonesia

Abstract

Sustained economic growth is essential to sustainable development and overall societal prosperity. This phenomenon denotes the continuous enhancement of a nation's economic conditions over time, characterised by elevated levels of economic activity compared to preceding periods. Economic growth is typically correlated with improved societal welfare, which is a key indicator of successful economic development. However, it is imperative to consider additional factors such as income distribution to comprehensively assess the impact of growth on well-being. Establishing economic growth is fundamental to sustainable economic development and prosperity. The primary objective of this study is to investigate the short- and long-run effects of Property Investment and Inflation on economic growth in Indonesia and examine the equilibrium relationship between Property Investment and Inflation on economic growth from the short run to the long run. To achieve this objective, this study employs the autoregressive distributed lag (ARDL) Panel Model and a cointegration test to establish short- and long-run relationships. The results indicate a short-to long-run equilibrium among the variables. An additional finding is that property investment has a positive effect on economic growth in the long run but no effect in the short run. The inflation variable demonstrates a positive effect on economic growth in the long run but no effect in the short run.