A Nonlinear Approach for Dutch Disease in Indonesia Economy: A Case of Palm Oil

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İzmir International Conference on Technology and Social Sciences
IICTSS2022 Book of Abstracts
A Nonlinear Approach for Dutch Disease in Indonesia Economy: A Case of Palm Oil

A Nonlinear Approach for Dutch Disease in Indonesia Economy: A Case of Palm Oil

Authors : Selim Şanlısoy, Sevim Nurbanu Yıldız

Pages : 45-45

View : 92 | Download : 88

Publication Date : 2022-08-31

Abstract :Palm oil emerges as an important raw material needed in many fields from food to chemical industry and energy sector. Indonesia is the largest palm oil producer in the world and has great potential to market this domestically and internationally. With a huge production capacity, the inability to effectively use income obtained from export of this product may have an adverse effect on the economic growth rate. This issue is called Dutch Disease in the literature. In the study, it is purposed for the validity of Dutch Disease to be investigated asymmetrically in Indonesia during the period of 2000:Q1-2021:Q4. Using the non-linear autoregressive distributed lag bound test model (NARDL) purposed by Shin et al. (2014), it is found that the positive shocks to palm oil price have a positve impact on real efective exchange rate. The findings indicate that Dutch Disease hypothesis is valid in Indonesia.
Keywords : Indonesia, Dutch Disease, palm oil price, real efective exchange rate

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