Proceedings of the 23rd Asian Forum of Business Education(AFBE 2019)

Does The Effectiveness of The Government Expenditure Accelerate Economic Growth?

Authors
Faisol, M. Pudjihardjo, Dwi Budi Santosa, Arif Hoetoro
Corresponding Author
Faisol
Available Online 9 June 2020.
DOI
https://doi.org/10.2991/aebmr.k.200606.002How to use a DOI?
Keywords
effectiveness, government expenditure, economic growth, 3SLS
Abstract
The purpose of this study is criticizing the effectiveness of government expenditure to speed economic growth in Indonesia. Three Stage Least Square (3SLS) is used. This study applied data for 32 provinces in Indonesia for the period of 2012 to 2017 to ascertain the relevance of Solow Swan’s Neo Classic Growth Theory in measuring economic growth in developing country in recent time. The results found that inflation does not influence on economic growth significantly, but there is a negative tendency towards economic growth. The variable of investment influences on growth significantly. The government role as represented by government expenditure has various effect both inflation and investment. The salary expenditure does not affect on inflation rate temporarily, an increase in salary expenditure permanently occurs, it is a possibly of having an effect on inflation. And the health expenditure influences on investment significantly, but the education and infrastructure sector have no effect on investment significantly. These results indicate that is accordance to Solow Swan’s neoclassical theory, that the capital of health expenditure can create capital accumulation, which in turn speeds economic growth. Our findings thus conform that Solow Swan’s Neo Classical growth theory is still relevant in evaluating the effectiveness of government spending in accelerating economic growth through government spending in developing country such as Indonesia
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Volume Title
Proceedings of the 23rd Asian Forum of Business Education(AFBE 2019)
Series
Advances in Economics, Business and Management Research
Publication Date
9 June 2020
ISBN
978-94-6252-977-9
ISSN
2352-5428
DOI
https://doi.org/10.2991/aebmr.k.200606.002How to use a DOI?
Open Access
This is an open access article distributed under the CC BY-NC license.

Cite this article

TY  - CONF
AU  - Faisol
AU  - M. Pudjihardjo
AU  - Dwi Budi Santosa
AU  - Arif Hoetoro
PY  - 2020
DA  - 2020/06/09
TI  - Does The Effectiveness of The Government Expenditure Accelerate Economic Growth?
BT  - Proceedings of the 23rd Asian Forum of Business Education(AFBE 2019)
PB  - Atlantis Press
SP  - 7
EP  - 14
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.200606.002
DO  - https://doi.org/10.2991/aebmr.k.200606.002
ID  - Faisol2020
ER  -