The Analysis of the Effect of Government Expenditure and Balance of Payment on Indonesian Economic Growth

Muhammad Nasir, Eddy Gunawan

2019

Abstract

This research is aimed to analyze the effect of government expenditure and balance of payment on economic growth in Indonesia. The data used in this research is secondary time series data on government expenditure, balance of payment, and economic growth in Indonesia during the period of 1990 until 2017. Model of analysis used in this research is Auto regressive Distributed Lag (ARDL). This model is regression model that includes not only the value of variable explain current situation but also the value of the previous years. The research results show the government expenditure for the current year and one year before affects GDP with the probability of alpha 1 percent. Meanwhile balance of payment for current year affect GDP only at probability of alpha 10 percent, but the balance of payment for one year before has the effect on GDP at 5 percent of alpha. Based on the Long run test it is found that both government expenditure and balance of payment variables do not significantly affect GDP. Meanwhile for the Short run test it is found that government expenditure has a negative and significant effect on GDP at 5 percent of alpha. So far, the variable of balance of payment also has negative and significant effect on GDP at 1 percent of alpha. It is hoped that this research can contributes and gives policy recommendation to the Government of Indonesia in the effort to increase economic growth and welfare of the people.

Paper Citation

in Harvard Style

Nasir M. and Gunawan E. (2019). The Analysis of the Effect of Government Expenditure and Balance of Payment on Indonesian Economic Growth. In Proceedings of the 2nd Economics and Business International Conference - Volume 1: EBIC, ISBN 978-989-758-498-5, pages 480-484. DOI: 10.5220/0009259204800484

in Bibtex Style

@conference{ebic19,
author={Muhammad Nasir and Eddy Gunawan},
title={The Analysis of the Effect of Government Expenditure and Balance of Payment on Indonesian Economic Growth},
booktitle={Proceedings of the 2nd Economics and Business International Conference - Volume 1: EBIC,},
year={2019},
pages={480-484},
publisher={SciTePress},
organization={INSTICC},
doi={10.5220/0009259204800484},
isbn={978-989-758-498-5},
}

in EndNote Style

TY - CONF

JO - Proceedings of the 2nd Economics and Business International Conference - Volume 1: EBIC,
TI - The Analysis of the Effect of Government Expenditure and Balance of Payment on Indonesian Economic Growth
SN - 978-989-758-498-5
AU - Nasir M.
AU - Gunawan E.
PY - 2019
SP - 480
EP - 484
DO - 10.5220/0009259204800484