Co-integration analysis between rice production and exchange reserves with rice consumption in Indonesia

Rice production is increasing every year but Indonesia still to import rice which is directly related to the use of foreign exchange reserves. Volume of rice import is caused by the small amount of rice production. If the volume of rice import is only a small amount means the amount of rice production is large. Large volume of imports will may have impact on foreign exchange reserves and constraints the ability to import raw materials and capital goods needed for development. The purpose of this study is to determine the co- integration between foreign exchange reserves and rice imports in Indonesia. The method used in this study is the Error Correction Model (ECM) analysis. The results of the study showed that there was co-integration of rice production and rice import while there was no co-integration of foreign exchange reserves and rice import that is the variables did not have a long-term relationship.