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Does Public Spending Reduce Poverty in Indonesia?

Author

Listed:
  • Asmawati
  • Isthafan Najmi
  • Cut Delsie Hasrina
  • Irwan Safwadi
  • Yuliana
  • Rizal Ansari

Abstract

Public welfare also plays an important role in poverty alleviation. Government expenditure has increased yearly for two decades, followed by a decline in poverty associated with effective and efficient regulation and budget allocation. In this study, we are interested in empirically examining the effect of social spending, health spending, and education spending on poverty in both the short and long term during the reign of the two presidents, namely the period 2005-2023, which has been neglected in exploring poverty reduction in Indonesia. This study uses time series data available on the Central Bureau of Statistics (BPS) Website with an Autoregressive Distributed Lag (ARDL) approach. This study finds evidence that social spending is necessary for increasing public spending that can significantly reduce poverty in Indonesia in both the short and long run. On the other hand, health spending has a negative effect, worsening poverty. Meanwhile, we are still looking for evidence that education spending allocated by the Government significantly reduces poverty in Indonesia in the short and long run.

Suggested Citation

  • Asmawati & Isthafan Najmi & Cut Delsie Hasrina & Irwan Safwadi & Yuliana & Rizal Ansari, 2025. "Does Public Spending Reduce Poverty in Indonesia?," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 66-77.
    • Handle: RePEc:bas:econst:y:2025:i:5:p:66-77
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    File URL: http://archive.econ-studies.iki.bas.bg/2025/2025_05/2025_05_04.pdf
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    More about this item

    JEL classification:

    • P46 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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