Analysis of International Trade in Indonesian: Plantation Sub-sector Commodities

Abstract

This study aims to determine and analyze: the influence and equilibrium of exchange rates, domestic income, foreign income, foreign exchange reserves and inflation on the trade balance of the Indonesian plantation subsector in the long and short term. The data in this study are time series data from 1987 to 2016, and using OLS regression analysis, cointegration test and Vector Error Correction Model (VECM). The results show that (1) the exchange rate, domestic income, foreign income and inflation have a significant effect on the trade balance of the Indonesian plantation subsector. While foreign exchange reserves have no significant effect on the trade balance of the Indonesian plantation subsector. (2) In the short term, the exchange rate and domestic income in lag 1 and foreign income in lag 2, foreign exchange reserves and inflation in lag 1 disrupt the balance of trade in the Indonesian plantation subsector. Meanwhile, in the long run the trade balance of Indonesia's plantation subsector will again reach its equilibrium.