Keywords
Economic growth
Inflation
Panel ARDL
Regional development
Unemployment
How to Cite
Abstract
This study examines the short-run and long-run determinants of inflation and unemployment across nine provinces in Sumatra, Indonesia, addressing the limited regional evidence on macroeconomic dynamics in resource-dependent economies. Using annual panel data from 2016 to 2024, the study employs a Panel Autoregressive Distributed Lag (ARDL) model with the Pooled Mean Group (PMG) estimator to analyse the relationships among inflation, unemployment, global oil prices, Gross Regional Domestic Product (GRDP), and Domestic Direct Investment (DDI). The findings reveal significant temporal and regional differences. Global oil prices are positively associated with inflation in the short run (β = 0.016, p = 0.044), whereas GRDP exhibits a significant positive long-run association (β = 0.266, p < 0.01). GRDP is negatively associated with unemployment in the short run (β = −2.066, p = 0.044) but positively associated in the long run (β = 0.535, p < 0.01), suggesting patterns consistent with jobless growth. Conversely, DDI exhibits a significant negative long-run association with unemployment (β = −5.920, p = 0.001), although provincial responses remain heterogeneous. The study contributes to regional macroeconomic literature by integrating external energy shocks and domestic economic factors within a dynamic provincial framework. Its findings question the uniform applicability of conventional growth–employment relationships and highlight the importance of regionally differentiated policies that combine inflation management, productive investment, and employment-oriented structural transformation to support inclusive economic development.
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