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Dynamics of Corruption, Government Expenditures, Consumption and Taxes in Indonesia: Macroeconomic Model Simulation

In: Proceedings of the Conference on SDGs Transformation Through the Creative Economy: Encouraging Innovation and Sustainability (TCEEIS 2023)

Author

Listed:
  • Regina Niken Wilantari

    (University of Jember, Economics Department, Faculty of Economics and Business)

  • Eddy Priyanto

    (STIE Jaya Negara Tamansiswa Malang, Accounting Department)

  • Zainuri

    (University of Jember, Economics Department, Faculty of Economics and Business)

  • Muhamad Annas

    (University of Jember, Economics Department, Faculty of Economics and Business)

  • Diah Rusminingsih

    (STIE Jaya Negara Tamansiswa Malang, Management Department)

  • Suryaning Bawono

    (STIE Jaya Negara Tamansiswa Malang, Management Department)

Abstract

This research aims to examine the impact of corruption and government spending on the level of consumption of Indonesian society, both household consumption and government consumption. Secondary data from the World Bank and International Transparency is the basis for this model to estimate Corruption, Government Expenditure, Consumption, and Taxes in Indonesia. This research study took place over 20 years from 2000 to 2020, and an “autoregressive vector” was applied to describe the relationship between one variable and another. We apply the multivariate regression method to examine the relationship between the variables Corruption, Government Spending, Consumption, and Taxes in Indonesia. We found that Indonesia is a country that has great potential to develop into one of the largest economies in the world. However, one of the main obstacles hindering Indonesia’s economic growth is corruption. Corruption is the practice of abusing public power for personal or certain group interests. Corruption can harm a country’s economy in various ways. Corruption can reduce the efficiency and effectiveness of government spending. Corruption can reduce state revenues from the tax sector. Corruption can reduce incentives to invest and innovate. Corruption can reduce public trust in the government and state institutions.

Suggested Citation

  • Regina Niken Wilantari & Eddy Priyanto & Zainuri & Muhamad Annas & Diah Rusminingsih & Suryaning Bawono, 2023. "Dynamics of Corruption, Government Expenditures, Consumption and Taxes in Indonesia: Macroeconomic Model Simulation," Advances in Economics, Business and Management Research, in: Imam Abrori & Indrian Supheni & Muhammad Mudhofar & Wahyuning Murniati & Nico Irawan & Arfan Ikhsan (ed.), Proceedings of the Conference on SDGs Transformation Through the Creative Economy: Encouraging Innovation and Sustainability (TCEEIS 2023), pages 230-236, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-346-7_43
    DOI: 10.2991/978-94-6463-346-7_43
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