Analysis of The Impact of Macroeconomic Shocks on Residential Property Price Index In Jabodebek-Banten

Abstract

Increased demand has driven the property business to grow and expand more rapidly. This has a positive impact on the national economy because it can increase the rate of economic growth through the level of investment. Behind its rapid development, the property business is extremely vulnerable to economic shock.. With Vector Error Corection Model (VECM) method, this study aims to see what macroeconomic variables influence the Residential property prices index as well as the magnitude of their contribution and how residential property price index respond to macroeconomic shocks. Macroeconomic variables used in this study such as economic growth, inflation, interest rates, money supply, and exchange rates. The results of this study show interest rates and economic growth does not significantly affect residential property price index on Jabodebek-Banten. The responses generated from the Impulse Response Function is different in each category. Meanwhile from the Forecast Error Variance Decomposition shows that the Money Supply, Exchange Rate, and Inflation has a big contribution on the shocks that occur in residential property price index in Jabodebek-Banten in various categories.

Keywords: VECM, Macroeconomics, Residential Property Price Index, JabodebekBanten

JEL Classification: GII, G12