Consumption Model of Imported Products: Indonesian Case

It is evident that Indonesian consumers were proud to consume imported products. Instead of buying and consuming national or local product, people consider of buying and consuming imported product will higher their self-esteem, especially products origin from developing country such as USA, Europe, and Japan. In accordance with macroeconomics theory, this fact will lead to lower Indonesian foreign exchange as the trading transaction mostly using USD. Therefore, the objective of the research was to develop consumption model of imported products. Euler equation approach was used with GNP per capita, interest rates, inflation rates, exchange rates, and income are influencing variables.