The Impact of Public Expenditure and Efficiency for Economic Growth in Indonesia

FAISOL, FAISOL and M, Pudjiharjdo and Dwi, Budi Santoso and Arif, Hoetoro The Impact of Public Expenditure and Efficiency for Economic Growth in Indonesia. Journal of Applied Economic Sciences, 61 (VIII). pp. 1992-2003. ISSN 1843 - 6110

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Abstract

The aim of this study is to examine the impact of public expenditure and efficiency to economic growth of regencies and cities in Java, Indonesia in the period of 2011-2016. This study employs secondary annual data on education expenditure, health expenditure, gross fixed capital formation, inflation rate, population growth, and per capita gross regional domestic product as obtained from Central Bureau of Statistic (BPS) and Autonomy Directorate General in Ministry of Finance (DJPK). Fixed effect model was applied for a sample of 73 regencies and cities in Java, Indonesia. The study results present that the increase in public expenditure will improve the economic growth of regencies and cities in Java, Indonesia. The study results also demonstrated a fact when the public expenditure is intercommunicated with the government efficiently; the positive evidence for government involvement in leading the impact of public expenditure on economic growth becoming unnecessary. Based on this study result, fiscal policy maker of regencies and cities in Java, Indonesia should consider more for using the expenditure to accelerate the economic growth.

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