The Relationship between Government Spending and Economic Growth Revisited

Authors

  • Wahyudi Wahyudi FEB UNTAN Pontianak

Abstract

This study aims to analyze and verify the relationship between government spending and economic growth. This relationship has been a hot topic for debate among economists, with plenty of research done and being done upon it. This particular study uses panel data from 34 provinces in Indonesia during the 2014-2018 period. During this time, Indonesia's government allocated significant amount of its annual budget towards infrastructure. The estimated econometric test result using the Granger Causality Test did not find support for the effect of economic growth on government spending. Conversely, government spending has a significant effect on economic growth. This study provides support for Keynesian economic system, where government spending is used as a policy instrument to encourage economic growth in a nation.

Keywords:  Government Spending, Economic Growth, Keynes, Wagner

JEL Classifications:  B22, Q01, Q12

DOI: https://doi.org/10.32479/ijefi.10614

Downloads

Download data is not yet available.

Downloads

Published

2020-11-04

How to Cite

Wahyudi, W. (2020). The Relationship between Government Spending and Economic Growth Revisited. International Journal of Economics and Financial Issues, 10(6), 84–88. Retrieved from https://www.econjournals.com/index.php/ijefi/article/view/10614

Issue

Section

Articles