ANALYSING SHORT RUN AND LONG RUN RELATIONSHIP BETWEEN INDUSTRIAL PRODUCTION LEVEL AND SELECTED MACROECONOMIC VARIABLES IN MALAYSIA THROUGH ARDL APPROACH

Abstract

Abstrak: This paper investigates the short run and long run relationship between industrial production index, interest rate, consumer price index, money supply, exchange rate, inflation rate and dummy health crisis in Malaysia. The sample period is monthly data, which is from January 2013 until December 2023, and the time series are subjected to various shortcomings such as unit root test, bound test, and the data were first tested for their residuals. The results reveal that there is evidence for a stable long-run relationship between the industrial production index, interest rate, consumer price index, money supply, exchange rate, inflation rate and dummy health crisis, and substantial short run interactions among them. Also, this paper indicates the trend analysis of industrial production index and all selected macroeconomics variables. Not only that, but the most import things also that the article try to investigate is the effect of the selected macroeconomics variables towards the industrial production index in Malaysia.