Dynamic Causal Relationship between Government Expenditures and Revenues in Indonesia

DOI

10.2991/agc-18.2019.82How to use a DOI?

Keywords

Dynamic Causality, Government Expenditure, Revenues, Fiscal Policy, Vector autoregression

Abstract

This paper examines the causal relationship between government expenditure and revenues in Indonesia during the period 1963 to 2017 by using the Vector Auto Regression (VAR) model. The results show that there is a strong relation and it represents a bi-directional causality between expenditure and revenue. However, government expenditure and revenue relationship is negative and revenue is positively related to government expenditure. This supports Wagner's law related to fiscal policy in Indonesia from revenue to expenditure. The finding also shows that the longer expenditure does not have an impact on increasing revenue and it stimulates a greater gap in the fiscal deficit in Indonesia. In order to cover the fiscal deficit, Indonesian government policy really relies on loans.

Copyright

© 2018, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Sri Rosmiati Sani
AU  - Sofyan Syahnur
AU  - Raja Masbar
AU  - M.S.A Majid
PY  - 2019/01
DA  - 2019/01
TI  - Dynamic Causal Relationship between Government Expenditures and Revenues in Indonesia
BT  - Proceedings of the 1st Aceh Global Conference (AGC 2018)
PB  - Atlantis Press
SP  - 553
EP  - 557
SN  - 2352-5398
UR  - https://doi.org/10.2991/agc-18.2019.82
DO  - 10.2991/agc-18.2019.82
ID  - Sani2019/01
ER  -