Recovery of Household Consumption as Accelerator of Economic Recovery in East Java: Empirical Study and Macro Policy Strategies

  • Muhamad Fathul Muin Badan Pusat Statistik
Keywords: Economic Recovery, Household Consumption, Macroeconomic Approach


The Covid-19 pandemic has harmed the economy in East Java. Households with the largest share of RGDP also experienced sluggish demand, which impacted the economic decline in East Java of more than eight trillion rupiahs. Economic recovery efforts through household consumption recovery are one of the strategic options to accelerate general economic recovery. Therefore, this study was conducted on RGDP data for household expenditure groups in all districts/cities in East Java during the 2016-2020 period using a panel regression analysis approach. The variables used include household consumption GRDP growth, inflation, regional poverty profile, percentage of internet users for online shopping, and the realization of social spending per capita of the poor. The findings of this study indicate that household consumption in East Java is classified as inelastic to price changes. It is due to the dominance of food consumption and controlled inflation. Meanwhile, the regional poverty profile has a negative impact on the recovery of household consumption. It shows that districts/cities with a high percentage of poor people tend to be more difficult to recover. Furthermore, the digitalization of the economy through e-commerce has not yet had a significant effect on the recovery of household consumption. It is due to the low use of the internet for online shopping among the population. The realization of social assistance per capita has a positive effect in encouraging the recovery of household consumption, although the contribution given is relatively small. It is caused by the low social assistance received compared to the loss of income experienced by the community. As a follow-up, there are four policies that the government can take to encourage the recovery of household consumption, including the sustainability of food price stabilization policies, increased penetration and digital education for MSMEs and the public, a combination of massive and comprehensive poverty alleviation policies, and synchronization of fiscal policy between government level.


Abu-Bakar, H., Williams, L., & Hallett, S. H. (2021). Quantifying the Impact of the COVID-19 Lockdown on Household Water Consumption Patterns in England. Npj Clean Water, 4(1), 1–9.

Afonasova, M. A., Panfilova, E. E., Galichkina, M. A., & Ślusarczyk, B. (2019). Digitalization in Economy and Innovation: The Effect on Social and Economic Processes. Polish Journal of Management Studies, 19(2), 22–32.

Albari, A., & Safitri, I. (2018). The Influence of Product Price on Consumers’ Purchasing Decisions. Review of Integrative Business and Economics Research, 7(2), 328–337.

Alvaro, J. A. H., & Ivars, A. E. (2014). The Demand Absorption Coefficient of a Production Line. Procedia CIRP, 19, 135–141.

Andreyeva, T., Long, M. W., & Brownell, K. D. (2010). The Impact of Food Prices on Consumption: A Systematic Review of Research on the Price Elasticity of Demand for Food. American Journal of Public Health, 100(2), 216–222.

Arenkov, I., Tsenzharik, M., & Vetrova, M. (2019). Digital Technologies in Supply Chain Management. Proceedings of the International Conference on Digital Technologies in Logistics and Infrastructure (ICDTLI 2019). Proceedings of the International Conference on Digital Technologies in Logistics and Infrastructure (ICDTLI 2019), St. Petersburg, Russia.

Astuti, P. B., & Mahardhika, A. S. (2020). COVID-19: How Does It Impact to Indonesian Economy. Jurnal Inovasi Ekonomi, 5(2), 85–92.

Aydın, C., Esen, Ö., & Bayrak, M. (2016). Inflation and Economic Growth: A Dynamic Panel Threshold Analysis for Turkish Republics in Transition Process. Procedia - Social and Behavioral Sciences, 229, 196–205.

Badan Kebijakan Fiskal. (2020). Media Briefing: Program Pemulihan Ekonomi Nasional. Badan Kebijakan Fiskal.

Bader, C., Bieri, S., Wiesmann, U., & Heinimann, A. (2016). Differences Between Monetary and Multidimensional Poverty in the Lao PDR: Implications for Targeting of Poverty Reduction Policies and Interventions: Differences Between Monetary and Multidimensional Poverty in the Lao PDR. Poverty & Public Policy, 8(2), 171–197.

Bai, J., Choi, S. H., & Liao, Y. (2020). Standard Errors for Panel Data Models with Unknown Clusters. Journal of Econometrics, S0304407620303341.

Balleer, A., Link, S., Menkhoff, M., & Zorn, P. (2020, July 27). Demand Versus Supply: Price Adjustment during the Covid-19 Pandemic. VoxEU.Org.

Ben Hmida, J., Lee, J., Wang, X., & Boukadi, F. (2014). Production Scheduling for Continuous Manufacturing Systems with Quality Constraints. Production & Manufacturing Research, 2(1), 95–111.

Bjorkdahl, J. (2020). Strategies for Digitalization in Manufacturing Firms. California Management Review, 62(4), 17–36.

Bozkurt, C. (2014). Money, Inflation and Growth Relationship: The Turkish Case. International Journal of Economics and Financial Issues, 4(2), 309–322.

BPS. (2020). Diagram Timbang Indeks Harga Konsumen Hasil SBH 2018, Buku 2 (06230.2002). Badan Pusat Statistik.

BPS. (2021a). [Seri 2010] Distribusi PDRB Terhadap Jumlah PDRB 34 Provinsi Atas Dasar Harga Berlaku Menurut Provinsi (Persen), 2015-2020.

BPS. (2021b). [Seri 2010] Laju Pertumbuhan Produk Domestik Regional Bruto Atas Dasar Harga Konstan 2010 Menurut Provinsi (Persen), 2018-2020.

BPS Jawa Timur. (2017). Perkembangan Indeks Harga Konsumen Jawa Timur Desember 2016 (01/01/35/Th. XV). Badan Pusat Statistik Provinsi Jawa Timur.

BPS Jawa Timur. (2018). Perkembangan Indeks Harga Konsumen Jawa Timur Desember 2017 (1/1/35/Th, XVI). Badan Pusat Statistik Provinsi Jawa Timur.

BPS Jawa Timur. (2019). Perkembangan Indeks Harga Konsumen Jawa Timur Desember 2018 (01/01/35/Th. XVII). Badan Pusat Statistik Provinsi Jawa Timur.

BPS Jawa Timur. (2020a). Perkembangan Indeks Harga Konsumen Jawa Timur Desember 2019 (01/01/35/Th. XVIII). Badan Pusat Statistik Provinsi Jawa Timur.

BPS Jawa Timur. (2020b). Statistik Pengeluaran untuk Konsumsi Rumah Tangga Provinsi Jawa Timur 2019 (35520.2001). Badan Pusat Statistik Provinsi Jawa Timur.

BPS Jawa Timur. (2021a). Perkembangan Indeks Harga Konsumen Jawa Timur Desember 2020 (01/01/35/Th. XIX). Badan Pusat Statistik Provinsi Jawa Timur.

BPS Jawa Timur. (2021b). Produk Domestik Regional Bruto Provinsi Jawa Timur menurut Pengeluaran 2016-2020 (Publikasi Statistik 35000.2108). Badan Pusat Statistik Provinsi Jawa Timur.

BPS Jawa Timur. (2021c). Pertumbuhan Ekonomi Jawa Timur Triwulan I-2021 (31/05/35/Th. XIX; pp. 1–12). Badan Pusat Statistik Provinsi Jawa Timur.

Braumann, B. (2004). High Inflation and Real Wages. IMF Staff Papers, 51(1), 123–147.

Breunig, R., & Majeed, O. (2020). Inequality, Poverty and Economic Growth. International Economics, 161(1), 83–99.

Cham, T. H., Ng, C. K. Y., Lim, Y. M., & Cheng, B. L. (2018). Factors Influencing Clothing Interest and Purchase Intention: A Study of Generation Y Consumers in Malaysia. The International Review of Retail, Distribution and Consumer Research, 28(2), 174–189.

Chan, C., Trihermanto, F., & Sebastian, E. (2020, May 22). How COVID-19 is Accelerating Indonesia’s Digital Transformation. Digital Economy.

Chen, G. J. (2012). A Simple Way to Deal with Multicollinearity. Journal of Applied Statistics, 39(9), 1893–1909.

Chou, Y.-M., Polansky, A. M., & Mason, R. L. (1998). Transforming Non-Normal Data to Normality in Statistical Process Control. Journal of Quality Technology, 30(2), 133–141.

Cochoy, F., Licoppe, C., McIntyre, M. P., & Sorum, N. (2020). Digitalizing consumer society: Equipment and devices of digital consumption. Journal of Cultural Economy, 13(1), 1–11.

Coibion, O., Gorodnichenko, D. G. Y., & van Rooij, M. (2019). How Does Consumption Respond to News about Inflation? Field Evidence from A Randomized Control Trial. DNB Working Paper, 651, 1–60.

Crespi, F., & Pianta, M. (2008). Demand and Innovation in Productivity Growth. International Review of Applied Economics, 22(6), 655–672.

Dallongeville, J., Dauchet, L., de Mouzon, O., Réquillart, V., & Soler, L.-G. (2011). Increasing Fruit and Vegetable Consumption: A Cost-Effectiveness Analysis of Public Policies. European Journal of Public Health, 21(1), 69–73.

de Bruijn, E.-J., & Antonides, G. (2021). Poverty and Economic Decision Making: A Review of Scarcity Theory. Theory and Decision.

del Rio-Chanona, R. M., Mealy, P., Pichler, A., Lafond, F., & Farmer, J. D. (2020). Supply and demand shocks in the COVID-19 pandemic: An Industry and Occupation Perspective. Oxford Review of Economic Policy, 36, 94–137.

Devi, L. Y., & Purnomosidi, R. Y. K. H. (2019). Estimation of Demand Elasticity for Food Commodities in Java Island. JEJAK: Jurnal Ekonomi Dan Kebijakan, 12(1), 54–67.

Diacon, P.-E., & Maha, L.-G. (2015). The Relationship between Income, Consumption and GDP: A Time Series, Cross-Country Analysis. Procedia Economics and Finance, 23, 1535–1543.

Duzan, H., & Shariff, N. S. B. M. (2016). Solution to the Multicollinearity Problem by Adding some Constant to the Diagonal. Journal of Modern Applied Statistical Methods, 15(1), 752–773.

Faith, D. O., & Agwu, E. (2014). A Review of The Effect of Pricing Strategies on The Purchase of Consumer Goods. International Journal of Research in Management, Science & Technology (, 2(2), 88–102.

Fellner, W. J., & Goehmann, B. (2020). Human Needs, Consumerism and Welfare. Cambridge Journal of Economics, 44(2), 303–318.

Femenia, F. (2019). A Meta-Analysis of the Price and Income Elasticities of Food Demand. Working Paper SMART – LERECO, 1–78.

Gerard, F., Imbert, C., & Orkin, K. (2020). Social Protection Response to the COVID-19 Crisis: Options for Developing Countries. Oxford Review of Economic Policy, 36(Supplement_1), S281–S296.

Gobel, L. V. (2015). Efektivitas Pemberian Bantuan Sosial kepada Kelompok Usaha Bersama di Kecamatan Bolaang Mongondow Selatan. Publik: Jurnal Manajemen Sumber Daya Manusia, Administrasi Dan Pelayanan Publik, 2(2), 94–103.

Greene, W. H. (2012). Econometrics Analysis (7th ed.). Prentice Hall.

Haile, F., & Nino-Zarazua, M. (2018). Does Social Spending Improve Welfare in Low-income and Middle-income Countries?: Does Social Spending Improve Welfare? Journal of International Development, 30(3), 367–398.

Hallegatte, S., Vogt-Schilb, A., Rozenberg, J., Bangalore, M., & Beaudet, C. (2020). From Poverty to Disaster and Back: A Review of the Literature. Economics of Disasters and Climate Change, 4(1), 223–247.

Harman, L., Bastagli, F., Hagen-Zanker, J., Sturge, G., & Barca, V. (2016). Cash Transfers: What Does the Evidence Say? Overseas Development Institute, 108.

Headey, D. D., & Hodge, A. (2009). The Effect of Population Growth on Economic Growth: A Meta-Regression Analysis of the Macroeconomic Literature. Population and Development Review, 35(2), 221–248.

Hensvik, L., Le Barbanchon, T., & Rathelot, R. (2021). Job Search during the COVID-19 Crisis. Journal of Public Economics, 194, 104349.

Hill, R., Griffiths, W. E., & Lim, G. C. (2011). Principles of Econometrics (4th ed.). John Wiley & Son, Inc.

IMF. (2018). Measuring the Digital Economy. Policy Papers, 2018(016).

iPrice. (2021, July). Daftar 50 Website & Aplikasi E-Commerce di Indonesia 2019.

Irons, J. (2009, September). Economic Scarring: The Long-Term Impacts of the Recession. Economic Policy Institute.

Jaramillo, L., & Chailloux, A. (2015). It’s Not All Fiscal: Effects of Income, Fiscal Policy, and Wealth on Private Consumption. IMF Working Paper WP/15/112, 1–30.

Jaravel, X., & O’Connell, M. (2020). Real-Time Price Indices: Inflation Spike and Falling Product Variety during the Great Lockdown. Journal of Public Economics, 191, 104270.

Jensen, E. (2009). Teaching With Poverty in Mind: What Being Poor Does to Kids’ Brains and What Schools Can Do About It (1st ed.). ASCD.

Kemenkeu. (2020). Peraturan Pemerintan Republik Indonesia Nomor 43 Tahun 2020. Kementerian Keuangan.

Khan, S., Khan, S., & Aftab, M. (2015). Digitalization and Its Impact on Economy. International Journal of Digital Library Services, 5(2), 138–149.

Khaniwale, M. (2015). Consumer Buying Behavior. International Journal of Innovation and Scientific Research, 14(2), 278–286.

Kim, R. Y. (2020). The Impact of COVID-19 on Consumers: Preparing for Digital Sales. IEEE Engineering Management Review, 48(3), 212–218.

King, K., & Palmer, R. (2006). Skills Development and Poverty Reduction: The State of the Art. Working Paper Series - No9, 1–84.

Krugman, P., & Wells, R. (2006). Macroeconomics (2nd ed.). Worth Publishers.

Kubicova, L., Kadekova, Z., Turcekova, N., & Bielik, P. (2019). Consumption of Food in Relation to Income and Saturation Limit of Slovak Households. Agricultural Economics (Zemědělská Ekonomika), 65(No. 12), 560–568.

Kusumatrisna, A. L., Sugema, I., & Pasaribu, S. H. (2019). Efek Threshold Inflasi terhadap Pertumbuhan Ekonomi Regional di Indonesia. Jurnal Ekonomi Pembangunan, 27(1), 43–52.

Lim, G., Nguyen, V., Robinson, T., Tsiaplias, S., & Wang, J. (2021). The Australian Economy in 2020–21: The COVID-19 Pandemic and Prospects for Economic Recovery. Australian Economic Review, 54(1), 5–18.

Maestas, N., Mullen, K. J., & Powell, D. (2016). The Effect of Population Aging on Economic Growth, the Labor Force and Productivity. RAND Working Papers, 1–53.

Mankiw, N. G. (2012). Macroeconomics (8th ed.). Worth Publishers.

Martin, A., Markhvida, M., Hallegatte, S., & Walsh, B. (2020). Socio-Economic Impacts of COVID-19 on Household Consumption and Poverty. Economics of Disasters and Climate Change, 4(3), 453–479.

Maun, C. E. F. (2020). Efektivitas Bantuan Langsung Tunai Dana Desa bagi Masyarakat MIskin Terkena Dampak Covid-19 di Desa Talaitad Kecamatan Suluun Tareran Kabupaten Minahasa Selatan. JURNAL POLITICO, 9(2), Article 2.

McKibbin, W., & Fernando, R. (2021). The Global Macroeconomic Impacts of COVID-19: Seven Scenarios. Asian Economic Papers, 20(2), 1–30.

Mehta, S., Saxena, T., & Purohit, N. (2020). The New Consumer Behaviour Paradigm amid COVID-19: Permanent or Transient? Journal of Health Management, 22(2), 291–301.

Mello Jr., L. R. de, & Carneiro, F. G. (2000). Consumption Behaviour and Persistently High Inflation: Evidence from Latin America. Revista Brasileira de Economia, 54(2).

Moav and, O., & Neeman, Z. (2012). Saving Rates and Poverty: The Role of Conspicuous Consumption and Human Capital. The Economic Journal, 122(563), 933–956.

Mottaleb, K. A., & Mishra, A. K. (2016). Rice Consumption and Grain-Type Preference by Household: A Bangladesh Case. Journal of Agricultural and Applied Economics, 48(3), 298–319.

Ni Mhurchu, C., Eyles, H., Schilling, C., Yang, Q., Kaye-Blake, W., Genç, M., & Blakely, T. (2013). Food Prices and Consumer Demand: Differences across Income Levels and Ethnic Groups. PLoS ONE, 8(10).

Nicola, M., Alsafi, Z., Sohrabi, C., Kerwan, A., Al-Jabir, A., Iosifidis, C., Agha, M., & Agha, R. (2020). The Socio-Economic Implications of the Coronavirus Pandemic (COVID-19): A Review. International Journal of Surgery, 78, 185–193.

Oner, C. (2020, February). Inflation: Prices on the Rise. International Monetary Fund.

Peterson, E. W. F. (2017). The Role of Population in Economic Growth. SAGE Open, 7(4), 215824401773609.

Pistaferri, L. (2015). Household Consumption: Research Questions, Measurement Issues, and Data Collection Strategies. Journal of Economic and Social Measurement, 40(1–4), 123–149.

Poser, G., & Shipchandler, Z. E. (1979). Impact of Inflation on Consumer Life Style: Some Empirical Results on the Money Illusion and Consumer Purchasing Behaviour. European Journal of Marketing, 13(3), 103–112.

Pradesha, A., Amaliah, S., Noegroho, A., & Thurlow, J. (2020). The Cost of COVID-19 on the Indonesian Economy: A Social Accounting Matrix (SAM) Multiplier Approach. International Food Policy Research Institute, 1–11.

Prawoto, N. (2009). Memahami Kemiskinan dan Strategi Penanggulangannya. Jurnal Ekonomi Dan Studi Pembangunan, 9(1), 56–68.

Raeskyesa, D. G. S., & Lukas, E. N. (2019). Does Digitalization Increase Economic Growth? Evidence from ASEAN8 Countries. Jurnal Ekonomi Indonesia, 8(2), 267–278.

Retnaningsih, H. (2020). Bantuan Sosial bagi Pekerja di Tengah Pandemi Covid-19: Sebuah Analisis terhadap Kebijakan Sosial Pemerintah. Aspirasi: Jurnal Masalah-masalah Sosial, 11(2), 215–227.

Roelen, K. (2017). Monetary and Multidimensional Child Poverty: A Contradiction in Terms? : Monetary and Multidimensional Child Poverty. Development and Change, 48(3), 502–533.

Rosidin, Mardhatillah, M., Andriani, F., Fitriani, A., & Rohmanan, M. (2021). Individual and Household Economic Recovery After the Covid-19 Through Temporary Waqf Program: 2nd Annual Conference on Social Science and Humanities (ANCOSH 2020), Malang, Indonesia.

Rozaki, Z. (2020). COVID-19, Agriculture, and Food Security in Indonesia. Reviews in Agricultural Science, 8(0), 243–260.

Sedik, T. S., Chen, S., Feyzioglu, T., Ghazanchyan, M., Gupta, S., Jahan, S., Jauregui, J. M., Kinda, T., Long, V., Loukoianova, E., Mourmouras, A., Nozaki, M., Paroutzoglou, S., Sullivan, C., Yoo, J., & Zhang, L. (2019). The Digital Revolution in Asia and Its Macroeconomic Effects. ADBI Working Paper Series, 1–29.

Shaheen, R. (2019). Impact of Fiscal Policy on Consumption and Labor Supply under a Time-Varying Structural VAR Model. Economies, 7(2), 57.

Sheth, J. (2020). Impact of Covid-19 on Consumer Behavior: Will the Old Habits Return or Die? Journal of Business Research, 117, 280–283.

Shyla, J. (2020). Emperor International Journal of Finance and Management Research. Emperor International Journal of Finance and Management Research, 5(7), 1–12.

Skeffington, J. S., & Rea, J. (2017). How Poverty Affects People’s Decision-Making Processes (pp. 1–75). Joseph Rowntree Foundation.

Sparrow, R., Dartanto, T., & Hartwig, R. (2020). Indonesia Under the New Normal: Challenges and the Way Ahead. Bulletin of Indonesian Economic Studies, 56(3), 269–299.

Sumarto, S., Suryahadi, A., & Widyanti, W. (2004). Assessing the Impact of Indonesian Social Safety Net Programs on Household Welfare and Poverty Dynamics. The SMERU Research Institute, 1–30.

Suryahadi, A., Izzati, R. A., & Suryadarma, D. (2020). The Impact of COVID-19 Outbreak on Poverty: An Estimation for Indonesia. SMERU Working Paper, 1–13.

Susanto, J. (2014). Impact of Economic Growth, Inflation and Minimum Wage on Poverty in Java. Dian Nuswantoro, 22(1), 32–41.

Susilawati, S., Falefi, R., & Purwoko, A. (2020). Impact of COVID-19’s Pandemic on the Economy of Indonesia. Budapest International Research and Critics Institute (BIRCI-Journal): Humanities and Social Sciences, 3(2), 1147–1156.

Toni, R., & Hyyrylainen, T. (2018). Digitalisation of Consumption and Digital Humanities: Development Trajectories and Challenges for the Future. Proceedings of the Digital Humanities in the Nordic Countries 3rd Conference, 1–8.

UNDP, & LPEM FEB UI. (2020). Impact of COVID-19 Pandemic on MSMEs in Indonesia (pp. 1–73). United Nations Development Programme.

Ur Rahman, I., Jian, D., Junrong, L., & Shafi, M. (2021). Socio-Economic Status, Resilience, and Vulnerability of Households under COVID-19: Case of Village-Level Data in Sichuan Province. PLOS ONE, 16(4), e0249270.

Valaskova, K., Kramarova, K., & Bartosova, V. (2015). Multi Criteria Models Used in Slovak Consumer Market for Business Decision Making. Procedia Economics and Finance, 26, 174–182.

Vinayagathasan, T. (2013). Inflation and Economic Growth: A Dynamic Panel Threshold Analysis for Asian Economies [Discussion Paper].

Walker, J., Pearce, C., Boe, K., & Lawson, M. (2019). The Power of Education to Fight Inequality. Oxfam Briefing Paper, 1–75.

Werning, I. (2012). Managing a Liquidity Trap: Monetary and Fiscal Policy [Unpublished Paper].

Wertheim-Heck, S., Raneri, J. E., & Oosterveer, P. (2019). Food Safety and Nutrition for Low-Income Urbanites: Exploring A Social Justice Dilemma in Consumption Policy. Environment and Urbanization, 31(2), 397–420.

Wu, B. (2011). The Macro-Control System on the Consumption Market. In Consumption and Management (pp. 99–110). Elsevier.

Yoon, J.-W., Kim, J., & Lee, J. (2018). Impact of Demographic Changes on Inflation and the Macroeconomy†. KDI Journal of Economic Policy, 40(1), 1–30.

Yu, K. D. S., Aviso, K. B., Santos, J. R., & Tan, R. R. (2020). The Economic Impact of Lockdowns: A Persistent Inoperability Input-Output Approach. Economies, 8(4), 1–14.

Yunanto, M., & Medyawati, H. (2015). Monetary and Fiscal Policy Analysis: Which is More Effective? Journal of Indonesian Economy and Business, 29(3).

How to Cite
Fathul Muin, M. (2022). Recovery of Household Consumption as Accelerator of Economic Recovery in East Java: Empirical Study and Macro Policy Strategies. East Java Economic Journal, 6(1), 32-59.