The results of the descriptive statistical test show that the economic variables used, namely GDP, Inflation, Money Supply, and Unemployment Rate tend to have relatively small values. This can be seen from the average value of each variable which is close to its minimum value, while the data variance also tends to be small. seen from the closeness of the average value to the standard deviation of each variable.

The results of the panel unit root test using PP Fisher Chi-Square are shown in the following table.

The results of the panel cointegration test using the Pedroni Residual Cointegration test are shown in the Table 3. Table 3 below shows

the results that there is no cointegration in the panel data used in the study, this is seen from the probability value above the significance level (α) 5 percent or 0.05. Thus, this study can use the PVAR model for the first difference. According to (Sulistiana et al., 2017) explained that if some variables contain unit roots and are not cointegrated with each other, the research model can still use VAR but variables containing unit roots must be differentiated and the results of the differentiation are free from unit root problems.

The results of causality test using the Granger Causality test are shown in the Table 4. Table 4 below shows that not all variables show a causal relationship. GDP has a one-way effect on Inflation with a probability value below 0.05. GDP also has a one-way effect on Money Supply, but not vice versa. While the other variables, namely Unemployment Rate to GDP, Money Supply to Inflation, Unemployment Rate to Inflation, and Unemployment Rate to Money Supply have no causal relationship with each other because the estimation results show a probability value above 0.05.

Based on the results of PVAR test, the model estimation equation is obtained as follows.

GDP_t = -1.341370 + 1.018208 GDP(-1)_t-1 - 0.314037 GDP(-2)_t-1 + 0.029045 Inflation(-1)

t-1 - 0.154952 Inflation(-2)_t-1 + 0.120955 Money

Supply(-1)_t-1 + 0.010717 Money Supply(-2)_t-1 + 0.249745 Unemployment Rate(-1)_t-1 - 0.134903 Unemployment Rate(-2)_t-1

Inflation has a positive effect on GDP at lag 1 and a negative effect on lag 2. Furthermore, Money Supply has a positive effect on GDP both in lag 1 and 2. Finally, Unemployment Rate has a positive effect on GDP in lag 1 and a negative effect on lag 2. Overall the variable does not show a significant effect because the estimation results show a probability value above 0.05.

INFLATIONt = -0.336910 + 0.140321 GDP(-1)

t-1 + 0.025349 GDP(-2)t-1 + 0.564351 Inflation(-1)

t-1 + 0.024786 Inflation(-2)t-1 + 0.044938 Money

Supply(-1)t-1 - 0.005737 Money Supply(-2)t-1 + 0.324095 Unemployment Rate(-1)t-1 - 0.274828 Unemployment Rate(-2)t-1

GDP has a positive effect on Inflation in lag 1 and lag 2. Furthermore, Money Supply has a significant positive effect on Inflation in lag 1 and has a significant negative effect on lag 2. Finally, Unemployment Rate has a positive effect on Inflation in lag 1 and has a negative effect on lag

2. GDP and Unemployment Rate do not show a significant effect because the estimation results show a probability value above 0.05. While Money Supply has a significant effect with a probability value of 0.04 in lag 1 and 0.03 in lag 2, meaning that every time there is an increase in Money Supply by 1 point, it will increase Inflation by 0.044938 in lag 1 and reduce Inflation by 0.005737

in lag 2.

MONEY SUPPLYt = 2.758408 - 0.350677 GDP(-1)

t-1 + 0.589131 GDP(-2)t-1 + 0.222768 Inflation(-1)

t-1 - 0.258936 Inflation(-2)t-1 + 0.429960 Money

Supply(-1)t-1 + 0.250030 M2oney Supply-2)t-1 + 1.034826 Unemployment Rate(-1)t-1 - 1.198738 Unemployment Rate(-2)t-1

GDP has a negative effect on Money Supply in lag 1 and a positive effect on lag 2. Furthermore, Inflation has a positive effect on Money Supply in lag 1 and a negative effect on lag 2. Finally, Unemployment Rate has a positive effect on Money Supply in lag 1 and a negative effect on lag 2. All variables do not show a significant effect because the estimation results show a probability value above 0.05.

UNEMPLOYMENT RATEt = 0.560272 + 0.014271 GDP(-1)t-1 - 0.025580 GDP(-2)t-1 -

0.096503 Inflation(-1)t-1 + 0.158885 Inflation(-2)

t-1 - 0.021327 Money Supply(-1)t-1 - 0.010380

Money Supply(-2)t-1 + 0.565540 Unemployment Rate(-1)t-1 + 0.387240 Unemployment Rate(-2)t-1

GDP has a positive effect on Unemployment Rate in lag 1 and a negative effect on lag 2. Furthermore, Inflation has a negative effect on Unemployment Rate in lag 1 and a positive effect on lag 2. Finally, Money Supply has a significant negative effect on Unemployment Rate in lag 1 and lag 2. GDP and Inflation do not show a significant effect because the estimation results

show a probability value above 0.05. While Money Supply has a significant effect with a probability value of 0.04 in lag 1 and 0.03 in lag 2, meaning that every time there is an increase in Money Supply by 1 point will reduce Unemployment Rate by 0.15181 in lag 1 and 0.28320 in lag 2.

The results of IRF test are shown in the Figure 2. During the 20 research periods, GDP responds to shocks in economic variables both positively and negatively. In the short term, GDP responds more due to shocks to the variable itself by 3.75 points in the 1st period. Shocks to inflation, money supply, and unemployment rates were responded with small percentages in the short term. Meanwhile, in the long term, the GDP response shows a downward trend toward shocks in all variables. Furthermore, the Inflation variable tends to respond to small amounts of economic variable shocks. Inflation responded to GDP shocks of -0.02 points in the 1st period and increased by 0.08 points in the 4th period, after which the response continued to decline until the 20th period. Likewise with other variables, in the short term Inflation responds to shocks in Money Supply and Unemployment but in the long term, the response decreases.

On the other hand, shocks to economic variables during the 20 research periods were responded to by the Money Supply both positively and negatively. The Money Supply responded negatively to shocks to GDP in periods 1 and 2 of-0.17 and -2.1 points. After that, the response turned positive which initially had an increasing trend but continued to decrease until the 20th period. Money Supply responds negatively to inflation shocks throughout the study period. Whereas in the Unemployment Rate variable, the response is positive in the short term and turns negative in the long term. And finally, the Unemployment Rate responds to shocks to economic variables negatively during the study period. The Unemployment Rate responded positively to shocks to inflation and money supply in several periods, but in the end, the response turned negative again.

The VD test results are shown in the Table 5. Based on Table 5 above, it can be concluded that the variation in the value of economic variables in 10 ASEAN countries is more influenced by the variable itself than other variables throughout the study period. Variations in the value of GDP are more influenced by the variables themselves, both in the short and long term. Inflation’s contribution was 0.003 percent in the short term and an increase of 0.37 percent in the long term. The contribution of Money Supply in the 2nd period was 0.68 percent and increased by 5.03 percent in the 20th period. This variable is also the biggest contributor compared to other variables. Unemployment Rate contribution was 0.11 in the 2nd period and increased by 0.86 in the 20th period.

The variation in the value of Inflation is influenced more by the variable itself in the 1st period by 99.9 percent and continues to decrease to 35.4 percent at the end of the period. The contribution of GDP is quite large to Inflation value in the long term reaching 49.4 percent, while the contribution of Money Supply only reaches 10.7 percent and Unemployment Rate is 4.3 percent in the 20th period. Furthermore, the variation in the value of Money Supply variable is influenced more by the variable itself by 98.7 percent in the 1st period and decreases to 54 percent in the 20th period. The contribution to GDP was very small at the beginning of the period at 0.25 percent but continued to increase significantly to reach 42.1 percent in the 20th period. This variable is also the biggest contributor to forming the Money Supply value from other variables. Meanwhile, Inflation and Unemployment Rate only contributed 1.75 and 2.08 percent until the 20th period.

Finally, variation on Unemployment Rate variable. Throughout the research period, variations in the value of Unemployment Rate are more influenced by GDP both in the short and long term. The influence of GDP is 49.3 percent in the 1st period and decreases to 47.5 percent in the 2nd period. This contribution is greater than the variable itself which only contributed 47.8 percent in the 1st period and

40.5 percent in the 20th period. Meanwhile, Inflation variable contributed 2.4 percent and continued to increase to 8.4 percent at the end of the period. Money Supply contributed the least to Unemployment Rate value, which was 0.38 percent in the 1st period and increased to 3.4 percent at the end of the study period. From the four economic variables tested by VD, it can be concluded that GDP is the largest contributor to all economic variables in the model.

Gross Domestic Product is one of the most important indicators in measuring a country’s economic growth. According to (Wu et al., 2021) GDP is a macroeconomic indicator that measures the level of economic development in a country or region. This variable has a major influence on the determination of macroeconomic goals and the formulation of regulations in the future. In addition, GDP is also influenced by several factors, such as the level of economic development, policy orientation, climate environment, and the standard of living of the population, etc.

Throughout the research period, economic growth in ASEAN countries tended to be stable with different achievements between countries. The highest growth was achieved by Myanmar in 2014. However, the existence of a pandemic that rocked the world economy resulted in a simultaneous decrease in GDP in 10 ASEAN countries in 2020. Economic growth contracted sharply to touch negative numbers in 6 countries including Indonesia, Malaysia, Thailand, Singapore, Philippines, and Cambodia where the lowest GDP occurred in

the Philippines. Meanwhile, 4 other countries namely Vietnam, Myanmar, Laos, and Brunei Darussalam were able to maintain a positive value in their GDP even though the trend was also experiencing a significant decline. Cases infected with Covid-19 and the number of people who died in these countries are relatively low when compared to other ASEAN countries. In addition, the government made decisions quickly and comprehensively during the first wave of Covid-19, so quick and good handling resulted in the shocks not causing a recession.

The main factor causing the decline in GDP in ASEAN countries is the result of policies taken by the government to reduce the spread of the Covid-19 virus. Even though they have different names, all countries implement a policy of limiting people’s activities outside the home. As a result, businesses in various sectors experienced a decline, so the rotation of the economic wheel was hampered. Significant declines occurred in countries that rely on foreign trade and tourism. To overcome this, several countries have implemented a policy of injecting funds into various business sectors, and providing social assistance to their communities so that their purchasing power is maintained and economic recovery can be maximized.

The results also show that the value of GDP cannot be separated from fluctuations in other economic variables. From these results, GDP becomes a variable that dominates other economic variables throughout the study period both in the short and long term. The test results show that GDP has a one-way relationship with influencing inflation and also the money supply. Furthermore, GDP shocks also can potentially affect the value of inflation, money supply, and unemployment rate. Therefore, GDP is also the largest contributor to variations in the value of inflation, money supply, and unemployment rates both in the short and long term.

Apart from affecting other variables, the research results also show that GDP is also influenced by inflation, money supply, and unemployment rate even on a small scale. Shocks to Inflation, Money Supply, and Unemployment have little effect on changes in the value of GDP. Likewise, with the variation in value, GDP is more influenced by the variable itself than other variables. This shows that many other economic factors are not included in the model that also affects GDP. According to (Yuliadi & Yudhi, 2021), several economic variables affect GDP, namely total population, interest rate, money supply, human development index, energy consumption, foreign debt, corruption perception index, financial literacy index, foreign direct investment, and vice versa.

Fluctuations in the value of GDP are generally used as a basis for consideration for decision- making and policy-making by the government. There is always a trade-off between GDP and inflation so both are related to one another. When the government focuses on increasing GDP, the consequence that must be faced is an increase in inflation and money supply. Conversely, if policies focus on controlling inflation, economic growth will decline. Inflation that is too low indicates a sluggish economy, so its existence is considered a trigger for the wheels of the economy to move. Some of the results from this study are in line with (Hicham, 2020); (Inam, 2014); (Masnan et al., n.d.); (Sahnoun & Abdennadher, 2019); (Yuliadi & Yudhi, 2021).

Inflation is also an important indicator in the economy that measures the level of price increases. According to (Jain et al., 2022), inflation can increase the overall cost of living so that the demand for the value of money decreases significantly and reduces people’s purchasing power. Inflation is divided into two types, namely, demand-pull inflation and cost-push inflation. Demand-pull inflation is caused by an increase in consumer aggregate demand for goods and services. This phenomenon reflects an imbalance between aggregate supply and demand where extensive pressure caused by consumer demand on the output capacity of supply forces prices to rise irrationally. While cost-push inflation occurs due to an increase in supply costs caused by an increase in production factor costs such as labor costs, raw material costs, and capital goods costs. An increase in production costs will force product prices to increase higher as manufacturers strive to maintain sustainable profitability.

The trend of inflation in several countries has tended to decrease since 2014. When a pandemic occurred, most countries showed low inflation rates. Singapore and Brunei Darussalam recorded their inflation at 0 percent in 2020. The average inflation rate for 10 ASEAN countries during 2020 was 2.6 percent. Despite these shocks, Myanmar became the country with the highest inflation among 9 other countries. Even in 2015, inflation was recorded at 10 percent, and during the pandemic, it was 7.5 percent. High inflation can indicate a fast and large amount of money circulating. This could happen due to high demand in the market. When the pandemic occurred, panic buying occurred in several countries. This condition can trigger scarcity and ultimately increase prices. Conversely, low inflation can even cause deflation indicating sluggish economic activity in a country. Low demand in the market indicates low public purchasing power. During the pandemic, there were layoffs, delays in production and trade activities and the cessation of various businesses reduced people’s welfare. At that point, people reduce purchases and only focus on consuming their basic needs.

During the research period, inflation tends to be influenced by GDP, money supply, and unemployment rates both in the short and long term. On the other hand, the presence of inflation in influencing changes in other economic variables is still of very little value, as is the variation in its value for other variables. All variables tend to contribute to inflation, with GDP being the biggest contributor. Inflation can be a problem that can disrupt economic stability. According to (Cili & Alkhaliq, 2022), high inflation indicates prices will continue to increase, the value of the currency decreases, and people tend to dislike cash, followed by a decrease in production activity. (Ahmad et al., 2014) added that high inflation uncertainty also makes the availability of external funds more expensive and as a result, managers delay or cancel fixed investment projects. Thus, the reduced rate of investment hinders economic growth. On the other hand, inflation can also be a trigger for economic turnover. According to (Ofori et al., 2017), positive effects of inflation include ensuring that the central bank can adjust real interest rates (to reduce recession) and encourage investment in non-monetary capital projects. Some of the results of this study are in line with the research of (Hicham, 2020); (Lisani et al., 2020); (Masnan et al., n.d.); (Sahnoun & Abdennadher, 2019); (Wulandari et al., 2019).

The percentage of money supply in each country has a different trend, although it tends to increase when economic shocks occur in 2020. Throughout the study period, Cambodia was the country with the highest increase in currency circulation. During times of economic shock, several countries had an increase in the percentage of money supply, namely Cambodia by 15.3 percent, Vietnam by 13.9 percent, Myanmar by 15.3 percent, Laos by 17 percent, Singapore by 13.2 percent, and Indonesia by 12.4 percent. Meanwhile, since 2014 Thailand has recorded a stable percentage of its money supply, namely 4.4 percent, but during the pandemic, it increased by 10.1 percent. Two other countries, namely Malaysia and Brunei Darussalam, recorded quite low percentages of the money supply. When a shock occurs, the money supply shows a negative percentage of 0.4 percent for Brunei Darussalam and 4 percent for Malaysia.

The high money supply in most ASEAN countries is supported by the consumption of the middle and upper-class people or groups of people who are not financially affected by the pandemic so they can still maintain their purchasing power. Apart from that, the circulation of money can also come from injections of government funds, bearing in mind that several countries implement policies of injection of funds in various business sectors and social assistance to the community to maintain their purchasing power. On the other hand, the pandemic has also created new habits in society in carrying out economic activities such as buying and selling and online transactions.

The money supply plays a role in maintaining

domestic financial flows and stability. The existence of the money supply in the economy must be balanced, meaning that it cannot be too little and not too much. This is because an imbalance in currency circulation will have a significant impact on the economy as a whole. The results show that throughout the study period, changes in the value of the Money Supply are more influenced by shocks and also variations in GDP than other variables which only affect a small amount. On the other hand, the money supply has a significant influence on inflation and the unemployment rate.

According to (Sumaryoto et al., 2021), excessive money circulation in the economy can trigger high inflation rates. An increase in the inflation rate can reduce the overall value of the money supply, resulting in a negative impact on the economy as a whole, which in turn will drive many companies into bankruptcy. In general, the central bank will respond to the high amount of money in circulation and inflation that occurs through contractionary policies. (Zhao, 2021) adds that Irving Fisher’s theory can explain the relationship between inflation and the money supply through the formula for the quantity of money: MV=PT. M is the money supply; V iscirculation speed; P is the average price level; and T is the volume of goods and services transactions. If the money supply increases on the left side of the equation, the average price level will increase at the same rate, which we can clearly observe from market conditions. This phenomenon illustrates that there is too much money in circulation but the availability of goods is very limited. Price increases can motivate producers to increase their production capacity and gain profits. However, this only applies in the short term because, in the long term, profits do not increase significantly.

According to (Mahadika & Wibowo, 2021), an increase in unemployment indicates a decline in economic performance. An increase in the money supply can encourage inflation, according to Philips’ theory, an increase in inflation can ultimately reduce the number of unemployed. In macroeconomics, an increase in aggregate demand will cause prices to rise. To meet this demand, producers increase their production capacity by adding workers (assuming that labor is the only factor that can increase output). Thus, it is concluded that the money supply and unemployment are negatively related.

Furthermore, According to (Antoni, 2015), the money supply can affect the running of productive investment projects, so that it can trigger economic growth in a country. (Chaitip et al., 2015) added that in the last decade when the global financial crisis occurred, the money supply also affected the occurrence of a global economic recession in developed and developing countries. The economic consequences in many developing countries of this indirect effect are as severe as the direct effects in developed countries. (Ihsan & Anjum, 2013) added that an increase in the money supply has a strong impact on economic activity by lowering interest rates and increasing investment. In this condition, consumers will spend more money and this will have an impact on increasing production. Rapid business development will create employment opportunities and increase capital goods. Therefore, according to (Inam, 2014) maintaining monetary stability (including through the supply of money) is also one of the conditions for achieving long-term and sustainable economic growth as a whole.

More than that, the implementation of a sound monetary policy coordinated with the prudent fiscal policy will create macroeconomic stability to guarantee sustainable economic growth. This research is in line with the research of (Hicham, 2020); (Inam, 2014); (Masnan et al., n.d.); (Yuliadi & Yudhi, 2021).

Another problem that is no less important in the economy is the unemployment rate. Low employment opportunities are a major problem, especially in developing countries with high population numbers. The economic shock that occurred in 2020 caused almost all ASEAN countries to experience an increase in the percentage of unemployed except for Myanmar which experienced a decline. The highest increase in unemployment occurred in the Philippines and the lowest in Cambodia. Several factors cause high levels of unemployment in several countries. This is closely related to the decline in economic performance in ASEAN countries. The government’s policy to tackle the spread of the Covid-19 virus is a tradeoff for the economic sector which continues to experience a decline. Restrictions on social activities imposed by the government resulted in a cessation of economic activity such as closing malls and shopping centers, closing tourism, postponing events, and others which slowed down the economic cycle. The impact is a huge loss that triggers the bankruptcy of business sectors in various fields. In line with this, layoffs contributed to an increase in unemployment.

The results of the study show that the money supply has a significant effect on the unemployment rate. In addition, shocks from all economic variables also affect the value of the unemployment rate, with GDP as the variable that has the greatest influence. Likewise, with the variation in value, the unemployment rate is more influenced by GDP both in the short and long term. On the other hand, shocks and variations in the unemployment rate also affect all economic variables in this study, but only in small amounts. The shock caused by the Covid-19 pandemic that occurred proves that the majority of recessions that occur in a country can increase its unemployment rate. This indicates a reduced level of people’s welfare and can contribute to increasing the level of poverty in the country. To avoid this, of course, various countries are trying to formulate effective policy packages so that they can increase their economic growth again.

The unemployment rate is a trade-off of inflation in the economy. That is, when the government wants to reduce the inflation rate, the unemployment rate will certainly increase, and vice versa. This was also stated by (Qin, 2020) a negative relationship between unemployment and inflation, which is manifested by a cumulative impulse response which explains that expansionary fiscal policy contributes to contractionary monetary policy, and cannot be reversed. Contractionary policies can be adopted to exchange high unemployment for low inflation, which provides a theoretical basis for selecting economic policies. Therefore, according to Wulandari et al. (2019), policymakers must consider overcoming inflation or unemployment first. In other words, when the government wants to increase employment opportunities, it has an impact on price stability. Conversely, when policymakers keep prices stable, they should not consider having more employment opportunities. Therefore, the unemployment rate becomes an important variable similar to inflation to maintain its stability so that the economy runs well.

Furthermore, the relationship between unemployment and economic growth can be explained by Okun’s law. According to (Source Title, n.d.), GDP has a negative relationship with unemployment. A high unemployment rate indicates that many people live below the poverty line. From an economic perspective, a high unemployment rate indicates that the availability of labor is not used efficiently in production activities. Therefore, total output in aggregate will also decrease. (Nagel, 2015) adds that low economic growth in a country can result in an increase in the unemployment rate in the long run. In addition, high and persistent unemployment can also be a barrier to economic growth. Unemployment indicates low global demand and investment in human capital.

Consequently, in the long term, the unemployed group loses some or all of their qualifications, while their skills become obsolete in an age of rapid technological progress. In addition, fiscal costs indicate lower budget revenues and higher social spending, resulting in lower public investment and increased public debt. Ultimately hindering growth opportunities. This research is in line with (Lisani et al., 2020); (Sahnoun & Abdennadher, 2019); (Wulandari et al., 2019); (Yuliadi & Yudhi, 2021).