Simultaneous Equation Model: Stunting, Unemployment, Poverty, and Economic Growth in Indonesia

ABSTRACT : This study examines the middle income trap (MIT), where countries struggle to move from middle- to high-income status due to slowed growth, stagnant productivity, and structural challenges. Despite Indonesia being classified as middle-income for over 30 years and recently upgraded to upper middle-income, it has yet to reach high-income status. However, if Indonesia fully harnesses its economic potential, it could become a high-income country by 2045, significantly affecting its aggregate demand and supply. This study aims to determine the impact of poverty, unemployment, and stunting on economic growth and the impact of economic growth, unemployment, and stunting on poverty. This research used two stage least square (TSLS) analytical tool. The results show that poverty, unemployment, and stunting have a significant effect on economic growth. Additionally, poverty, unemployment, and stunting individually also have a significant impact on economic growth. Economic growth, unemployment, and stunting have a significant effect on poverty. Furthermore, economic growth, unemployment, and stunting individually also have a significant impact on poverty.