The Impact of Monetary Policy and Export Levels on Economic Growth in the MSME Sector in Indonesia

Abstract

The number of Micro, small and medium enterprises (MSMEs) is greater than large enterprises in Indonesia. The number of Gross Domestic Product (GDP), exports and labor absorption in the MSME sector is more distinguished than large enterprises. Although the number of MSMEs, labor and exports is more than large enterprises, MSMEs still have problems. This research was purposed to examine the short-term and long-term relationship of monetary policy and exports on the GDP in the MSME sector. The method used an error correction model. The variables used in this research were interest rates, exchange rates, exports as independent variables, whereas the GDP of the MSME sector as dependent variable. The data used were from 1997 to 2019. The results of this research showed that in the short-term, the variables of interest rates, exchange rates and exports had no effect on the GDP of the MSME sector in Indonesia. But in the long term, the independent variable had an influence on the GDP of the MSME sector. It is hoped that a more in-depth study of the types of products exported and GDP per MSME sector become the main attraction for further researchers.