| dc.description.abstract | Since Indonesia is located in the Ring of Fire, it is well understood that it has been
highly vulnerable to earthquakes. Earthquakes can have many effects, including infrastructure
damage and socioeconomic disruption. During 2009 to 2019, West Nusa Tenggara Province had
the most earthquake frequencies. This paper aims to investigate the impacts of earthquakes on
the regional economy of West Nusa Tenggara Province on the consumer price index (CPI) and
inflation using the autoregressive integrated moving average with exogenous variables
(ARIMAX) method. The data used in this paper are monthly CPI and the inflation in West Nusa
Tenggara Province from January 2008 to December 2018. Based on the modeling process, two
models for CPI and inflation are obtained. The forecast values of CPI are converted to inflation
values to produce an indirect inflation forecasting, and the RMSE of four models are compared.
The overall best model, with the smallest RMSE, for inflation is ARIMAX with stochastic trend
and seasonal variable, which indicates that direct forecasting using inflation data is better than
indirect inflation forecasting using CPI. From the best model, the earthquake effect, i.e., the real
and estimated effects, has positive and negative effects on CPI and inflation with the magnitude
of the real effect that is larger than the estimated effect. These two conditions indicate that the
model cannot forecast well the earthquake effect. Therefore, much greater anticipation is
necessary from local governments regarding the impact of the earthquake on the prices of
essential commodities that is likely to occur in the future | en_US |
