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Does the Wagner’s Law exist in a strategic national area? An evidence from Kedungsepur - Indonesia

Author

Listed:
  • Gatot Sasongko

    (Satya Wacana Christian University)

  • Andrian Dolfriandra Huruta

    (Satya Wacana Christian University)

  • Anita Wardani

    (Satya Wacana Christian University)

Abstract

The Kedungsepur National Strategic Area was formed to realize urban areas as the center of national and international economic activities. In order to realize this goal, government expenditure and economic growth are important variables in the development process. Empirically, the study was conducted to analyze the relationship between government expenditure and economic growth from the perspective of Wagner's Law in 6 regencies or cities in the Kedungsepur National Strategic Area during 2012 to 2017. Methodically, this study used Panel Granger Causality and Panel Data Regression to explain the short-term relationship between both variables. The results showed that there was a negative one-way relationship from economic growth to government expenditure. The increase in economic growth in the previous year would reduce the government expenditure in the short term, resulting the Wegner's Law inapplicable in the Kedungsepur National Strategic Area. This was due to the ineffectiveness of institutions, differences in regional expenditure structures towards state expenditures and the lack of government work programs in the productive sector. Thus, a good and coordinative institutional environment was needed to realize the cooperation in crucial sectors, as well as the distribution of regional expenditures on more productive expenditures based on priority interests, aiming at the welfare of the community.

Suggested Citation

  • Gatot Sasongko & Andrian Dolfriandra Huruta & Anita Wardani, 2019. "Does the Wagner’s Law exist in a strategic national area? An evidence from Kedungsepur - Indonesia," Post-Print hal-02163008, HAL.
    • Handle: RePEc:hal:journl:hal-02163008
    DOI: 10.9770/ird.2019.1.2(2)
    Note: View the original document on HAL open archive server: https://hal.science/hal-02163008
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    References listed on IDEAS

    as
    1. Gizem Uzuner & Festus Victor Bekun & Seyi Saint Akadiri, 2017. "Public Expenditures and Economic Growth: Was Wagner Right? Evidence from Turkey," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 3(2), pages 36-40, June.
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    1. Gaukhar Mataibayeva & Serik Makysh & Nurilya Kuchukova & Saule Zhalbinova & Aigerim Zhussupova, 2019. "Conceprual approaches to the public debt management and its impact on financial stability," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(2), pages 1496-1513, December.
    2. Artur Jacek Kożuch, 2020. "Dysfunctions of the process of managing finance in Polish communes - the perspective of management sciences," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 8(1), pages 442-453, September.
    3. Tetyana Vasylieva & Oleksii Lyulyov & Yuriy Bilan & Dalia Streimikiene, 2019. "Sustainable Economic Development and Greenhouse Gas Emissions: The Dynamic Impact of Renewable Energy Consumption, GDP, and Corruption," Energies, MDPI, vol. 12(17), pages 1-12, August.
    4. Irina I. Frolova & Olga Yurievna Voronkova & Natalia Andreevna Alekhina & Irina Kovaleva & Natalia A. Prodanova & Liudmila V. Kashirskaya, 2019. "Corruption as an obstacle to sustainable development: A regional example," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(1), pages 674-689, September.

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    More about this item

    Keywords

    Wagner's Law; Economic Growth; Government Expenditure; Panel Granger Causality; Panel Data Regression;
    All these keywords.

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