The Impact of Government Spending on Economic Output Provinces In Indonesia

Abstract

The purpose of this study is to analyze the impact of government spending on provincial economic output in Indonesia. GRDP is used as a proxy for economic output growth. The object research is the provinces in Indonesia (33 provinces) with the research period 2016-2021. The research method used is Generalized Least Square (GLS). The results showed that the variables of unemployment, government spending on social protection, mean of year's scholling (MYR) and labor had a significant effect on output growth (GRDP), while education spending did not significantly affect output growth. Therefore, the central and regional governments make planning plans on an annual, medium-term and long-term basis with the intention that the role of the existing budget in government can produce targeted output, especially in the education sector.Keyword: output growth; government expenditure; generalized least square; GRDP