Macroeconomic indicators in question here is inflatio
Macroeconomic indicators in question here is inflation, employment, economic growth, and the balance of trade (a proxy of the balance of payments), which is a key indicator. Macroeconomic variables are interrelated through the goods market, the money market, the labor market and the stock market that forms the internal balance (equilibrium macro) and external balance (balance of payments-BOP). In addition, other macroeconomic variables observed were of the rupiah against the U.S. dollar, interest rates, money supply, and investment. Macroeconomic stability can be seen from the effect of policy shocks in food prices or other macroeconomic variables of the key indicators of macroeconomic variables. If the shocks cause large fluctuations in macroeconomic variables, it can be said macroeconomic stability vulnerable to such shocks. Conversely, if the impact causing minor fluctuations, it can be said to be stable macroeconomic stability. The measures used in assessing the stability of the study is the impact of the shock / shock against: (1) differences in initial and final value of the endogenous variables, (2) the amount of variation seen from the amplitude fluctuations of endogenous variables, and (3) the length of time for the endogenous variable fluctuations reach the new equilibrium, and (4) the coefficient of variation. A shock could lead to a new equilibrium, the condition is rising, fixed, or a decrease of the equilibrium conditions at the beginning of the shock.
The policy of food prices is to maintain the stability of food prices that inflation can be controlled. Furthermore, the rate of inflation affects the interest rates on the money market. Then the interest rate affect investment in the goods market. Inflation also affects the demand for labor in the labor market tenga and so there was a relationship between macroeconomic variables, resulting in a balance. The relation between the variables that affect each other simultaneously, the relation of which is more appropriate if specified in the model VAR (Vector Autoregressive). The general form VAR model in accordance with the optimal order of Likelihood Ratio test results as k is: