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3.5.4 Impulse Response Function
Impulse Response Function IRF estimation is needed to determine an endogenous variable response to shocks specific variables. IRF also used to see
the shockscaused by the other variables and how long these effects occur Nugroho, 2009. Through IRF, the response of an independent change of one
standard deviation can be reviewed. IRF explore the impact of interference by one standard error as an innovation on an endogenous variable against other
endogenous variable. An inovation on a variable, will directly impact the variable in question, and then proceed to all other endogenous variables through the
dynamic structure of the VAR Nugroho, 2009.
3.5.5 Variance Decomposition Test
Variance decomposition, the decomposition of the variance of the endogenous variables into the component surprises endogenous variables VAR
else in the system. This explains the variance decomposition proportions due to the movement of a series of variables surprise itself compared with other variables
surprise. Nugroho, 2009. The variance decomposition will provide information on the proportion of the movement the shock effect to the shock on other variables
in the current period and future periods Ajija, 2011.
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CHAPTER IV RESEARCH FINDINGS
4.1 Researched Variables Overview
This sub-chapter will introduce the variables used in this research. This research has three variables from five countries which are; Export EXPT, Import
IMPT, and nominal exchange rate of the countries EXR. Total varibles used in this research are fiveteen variables which taken monthly from year 2005 to 2015.
The data of the countries will be processed one by one, and then compared between countries to see how strong the economics of the selected ASEAN-5
countries are.
4.1.1 Country’s Trade Balance Overview
The data shows the movement of exports and imports from ASEAN-5 countries are fluctuated. Trade balance experienced a recession in 2008 caused by
the sub-prime mortgages that occurred in the US, resulting the currency shocks that ultimately affect the trade balance. After 2008, the trade balance stably
improved. The following table fluctuations in exports and imports of the five Asian countries.
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