Application of Panel Vector Autoregressive Model to Analyze Poverty in Indonesia

This study aims to determine the effect of open unemployment rate, economic growth, local revenue, human development index, Gini ratio, and average years of schooling on poverty rate both in the long run and short run. Quantitative approach with PVAR/PVECM method is used in 34 provinces of Indonesia in 2014-2023. The results show that the open unemployment rate (TPT) has a positive and significant effect on the poverty rate (TK) in the short term, while in the long term the open unemployment rate (TPT) has a negative and significant effect on the poverty rate (TK). Economic Growth (EG) has no effect on the poverty rate (TK) in the short term, while in the long term Economic Growth (EG) has a negative but insignificant effect on the poverty rate (TK). Regional Original Revenue (PAD) has no effect on the poverty rate (TK) both in the short and long term. The Human Development Index (HDI) has a negative and significant effect on the poverty rate (TK) in both the short and long term. The Gini Ratio (GR) has a positive and significant effect on the poverty rate (TK) in both the short and long run. Average Years of Schooling (RLS) has a negative but insignificant effect on the poverty rate (TK) in the short term, while in the long term Average Years of Schooling (RLS) has a negative and significant effect on the poverty rate (TK). The government needs to create short-term jobs and improve education and job training for the long term. In addition, strengthening the dimensions of the Human Development Index (HDI), equitable income redistribution, and improving access to and quality of education can be strategies in poverty alleviation.