The Effect of Export, Import, and Public Education Expenditure on Foreign Exchange Reserves: A Geographical Perspective Study on Indonesia

Abstract

Foreign exchange reserves are assets owned by a country to maintain the stability and resilience of a country's economy, to avoid economic and financial crises. In addition, foreign exchange reserves are an indicator to measure the extent to which the country can compete in international trade. So this study aims to analyze and determine macroeconomic factors, namely exports, imports, exchange rates, and public education expenditure on foreign exchange reserves that occur in Indonesia, both in short - term relationships and long-term relationships. The data used in the study is secondary data annually from 2005 to 2019 (15 years). The results obtained are the short-term equilibrium relationship using the error correction method (ECM) test, the results show that the short-term equilibrium relationship shows that the exchange rate has a significant effect on foreign exchange reserves, while other factors export, import, and public education expenditure do not affect. to foreign exchange reserves. Meanwhile, the long-term equilibrium relationship shows that exports, exchange rates, and public education expenditure have a significant influence on the country's foreign exchange reserves. While imports are the opposite, that is, they do not affect foreign exchange reserves.