MACROECONOMIC INDICATORS AS DETERMINANTS OF FLUCTUATING NATURAL RESOURCE COMMODITY PRICES: A CASE OF AN EMERGING ECONOMY

Abstract

The volatility of natural resource commodity prices is a global issue that has gained attention from researchers and academics due to its importance in a nation's socioeconomic development. Considering the significance of natural resources for the sustainable development of a nation and investigating the impact of macroeconomic indicators on natural resource commodity price volatility in Indonesia, this study was conducted using economic theory and empirical analysis. The study used secondary data sources from 2001 to 2020, including the Goldman Sachs Commodity Index and the World Bank Index, and applied Autoregressive Distribution Lags tests to examine the relationship among the study variables. The findings revealed that foreign direct investment, gross domestic product growth, human capital index, exports, expected inflation, industry conditions, and economic conditions all positively impact natural resource commodity prices in the short and long term, with varying degrees of impact in the short term. Policymakers and practitioners can use these results to implement effective policies related to natural resource commodity price volatility that benefit the people in developing economies.