Impact of Covid-19 Cases on Inflation in ASEAN

Inflation Interest Rate Money Supply Panel Vector Error Correction Model


December 3, 2023


This study is aimed to examine the impact of the total cases of COVID-19, interest rates, and money supply on inflation in ASEAN-5. Using the Panel Vector Error Correction Model (PVECM), the study reveals that the number of COVID-19 cases has a negative impact on inflation in ASEAN-5 both in the short and long run. The higher the total cases, the lower the inflation in the region. This was caused by a shock from the demand aspect due to the large number of people who were not working, so that household income decreased. A decrease in income will certainly impact on a decrease in demand which will affect equilibrium inflation. In addition, some control variables such as interest rates have a negative effect on inflation in the long run. Meanwhile, the money supply has no significant effect on inflation during the pandemic.