摘要：Indonesian Crude Oil Price (ICP) often
fluctuates by the shock of world oil prices. Because of its
important role, the fluctuations or shocks in ICP will
affect Indonesia's macro economy. To overcome this
problem, this study analyzes the impact of the crude oil
price shocks on Indonesia's macro economy which
includes economic growth and the money supply (M2)
during 2010-2016 using Vector Error Correction
Mechanism (VECM). The results show that short-term
fluctuations of ICP have a significant and positive effect
on economic growth but have a non-significant effect on
the money supply. In the long term equilibrium, ICP have
a positive and significant effect to both economic growth
and money supply which in line with Impulse Response
Function (IRF) and Decomposition of Variance (FEDV)
analysis. Given its positive impact, the recent decline in
oil prices will harm the Indonesian economy. Therefore,
the government needs to reduce its dependence on crude
oil exports and accurately predict the crude oil price in
the future.
