Dynamic Relationship of Macro Variables and Liquefied Petroleum Gas Subsidy Transformation Program

Most Indonesians rely on liquefied petroleum gas as one of their primary sources energy. Liquefied is classified into subsidized and non-subsidized. Subsidized primarily used by low-income households, small businesses, poor fishermen farmers for cooking. However, no exit strategy has been established to overcome the increase in government spending kerosene introduced 2008. The problem that macro variables may influence economic prices. research aimed identify relationship between might affect It applied a quantitative method with Vector Auto Regression (VAR) Error Correction Model (VECM). results demonstrate inflation rate have significant impact price gas. Then, gross domestic product, rate, world positive correlations prices Meanwhile, currency exchange oil negative coefficients. regression model indicates rise increases market Furthermore, increased fuel means more people cannot afford because high reduces purchasing potentially number people.