the inflation effect toward industry in developing country, namely Indonesia

the inflation effect toward industry in developing country, namely Indonesia

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First, I would like to apologize for being absence for couple months from my routine in writing about finance review. However in next couple days, we will review about the influence of some macro parameter toward industrial index in developing countries. In this discussion, we will talk about how the condition in Indonesia, one of the fastest growing economic countries in south east asia.
The basic of analysis will be based on the concept of Capital Asset Pricing Model or more familiar being known as the CAPM concept. This model put the movement of agrregate index as the beta of the market. Here we try to replace the beta market with the inflation and see how is it look like toward index of industry in Indonesia.

One of the more develop and focus here is, we also attach the date of the announcement from the rise of domestic oil price. Many economist belief that the rise of oil price trigger the inflation to be wilder. Therefore we will see how this judgment occur in the real laboratory.

From the graph above we could see that inflation really affect the index mostly on crisis 2008. Before the occasion index of the industry and inflation did not really affect each other. 

From the rolling adj R square, its obviously seen that in Feb 2008 and Feb 2012, is the moment where most of the index was affected by the inflation. These analysis become interesting since at that time there was huge world crisis in the world. So somehow Indonesia also give some respond toward it.

For further and deep analysis of this phenomenon, you can contact me directly toward email in dimasmukhlas@yahoo.com!

cheers!