Granger Causality Between Local Government Expenditure and Economic Growth in Indonesia

Sri Kurniawati ()
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Sri Kurniawati: Universitas Tanjungpura, Jalan Prof. Dr. Hadari Nawawi, 78115, Pontianak, Indonesia Author-2-Name: Author-2-Workplace-Name: Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:

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Abstract: Objective - This study examines the causal relationship between government expenditure and economic growth in West Kalimantan between 2009 and 2015. This research resulted in the enactment of Wagner's Law and/or Keynes's Theory in West Kalimantan leading the local government to take the right policies as an effort towards improving economic development. Methodology/Technique - By using panel data that combines time series data and cross-site data, it will be estimated by the Granger causality test which begins with a stationary test and co-integration test. Based on the co-integration tests, the results suggest that there is a long-term relationship between government expenditure and economic growth. Meanwhile, based on the Granger causality test, there is no reciprocal relationship between government expenditure and economic growth. Findings - A direct relationship in the form of the influence of government expenditure on economic growth in West Kalimantan. Novelty - These results are in line with the Keynes's Theory through its national income function.

Keywords: Government Expenditure; Economic Growth; Co-integration; Causality. (search for similar items in EconPapers)
JEL-codes: F40 F43 F49 (search for similar items in EconPapers)
Pages: 7
Date: 2018-12-02
New Economics Papers: this item is included in nep-sea
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Citations: View citations in EconPapers (1)

Published in Journal of Business and Economics Review, Volume 3, Issue 4

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