Economic Growth and Inflation Responses Caused by Political Condition and Corruption Shocks in Supporting SDGs: Case Study of Asean Countries

Abstract

Objective: The research objective of this study is to examine and analyze the interaction of economic growth, inflation, political condition, and corruption in ASEAN to support the achievement of SDGs in each country. Theoretical Framework: The theories used in this study are Philips' theory related to inflation and unemployment, aggregate demand theory related to inflation and output, institutional theory for political stability and corruption. Method: The method used is PVAR for the period 2010-2023. The first stage is testing and analyzing the stationary panel with the LLC test approach. The second stage is testing and analyzing the shock response of macroeconomic variables with political conditions and corruption. Results and Discussion: The estimation results show that the variables used in this study are stationary at the level level, so there is no need to conduct a cointegration test. The impulse response results show that the interaction of economic variables is responsive to the performance of political stability and corruption. Research Implications: The policy recommendations provided by this study are to maintain political stability and reduce the level of corruption. In addition, the governments of each ASEAN country need to strengthen cooperation related to law, economy, and others. This will be able to support the achievement of SDGs in each country.