Determinants of Consumer Confidence During the COVID-19 Structural Break: Evidence from Yogyakarta, Indonesia
DOI:
10.51601/ijersc.v7i5.1085Published:
2026-10-12Downloads
Abstract
Consumer confidence plays a crucial role in driving household consumption and maintaining regional economic stability, particularly during periods of economic uncertainty. This study aims to examine the effects of the COVID-19 pandemic, inflation, tourist arrivals, exchange rates (BI Rate), and the Regional Minimum Wage on the Consumer Confidence Index (CCI) in the Special Region of Yogyakarta. The study employs a quantitative approach using monthly time-series data covering the period from 2018 to 2025, obtained from Statistics Indonesia (BPS), Bank Indonesia (BI), and other official institutions. The analysis applies the Autoregressive Distributed Lag (ARDL) model, which enables simultaneous estimation of both short-run and long-run relationships among variables integrated at different orders, namely I(0) and I(1). The empirical findings indicate that consumer confidence exhibits strong persistence, implying that previous consumer perceptions significantly influence current confidence levels. In the short run, the COVID-19 pandemic and exchange rate depreciation have significant negative effects on consumer confidence, whereas inflation and tourist arrivals positively and significantly affect the Consumer Confidence Index. Meanwhile, the BI Rate and the Regional Minimum Wage do not have statistically significant effects on consumer confidence. These findings support the life cycle hypothesis theory, suggesting that household consumption decisions and consumer confidence are primarily shaped by expectations of permanent income and future economic prospects rather than temporary macroeconomic shocks. The study highlights the importance of maintaining macroeconomic stability, promoting tourism recovery, preserving exchange rate stability, and controlling inflation within a manageable range to strengthen consumer confidence and support sustainable regional economic growth.
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