Cointegration vector (ß ') shows a long-term relationship
Cointegration vector (ß ') shows a long-term relationship of the variables to be analyzed. Cointegration vectors can be shown in the form of a matrix equation cointegration based on the number of long-term, resulting in cointegration testing. VECM estimation results are used to obtain information innovations in the short and long term with a certain degree of change.
2.5 Impact of Policy and Macroeconomic Balance
Macroeconomic variables that a major issue is the growth of output, inflation, unemployment, and balance of payments. Macroeconomic variables are interrelated through the goods market, the money market, the labor market, and a stock market that forms the internal balance (equilibrium macro) and external balance. In the event of crop failure in a country where people contribute food expenditure is higher than non-food spending, will give effect to the macro economy. Crop failures are likely to increase food prices. Assuming there are only two sectors of the economy, food and non-food, food prices will increase from P0 and P1 P P. This implies increased expenditure on food and non-food sector will affect the form of lower prices and inflation will increase (Figure 1). Conversely, if there is an increase in food production. Thus, fluctuations in the harvest will cause instability, both for consumers of rice, rice farmers, manufacturers and producers. In the case of positive supply disruption and no government intervention, in order to avoid excess supply penurnan price needs to be collected. Food collection is in need of funds. Before 1999, the use of funds by Bank Indonesia (BI). There are two different policies that may run against the money that is used to hold and / or distribute food supplies. The first possibility, no "sterilization". Purchasing excess supply use BI funds will increase the money supply and the aggregate price level.