Economic Growth And Government Size In Indonesia: Some Lessons For The Local Authorities
The relationship between economic growth and government spending (the size of the government involvement in economic activity) is an interesting issue that has been a subject of controversy and debate. The direction of how government size associates with economic growth has so far been inconclusive. This paper attempts to examine the relationship between both variables for the case of Indonesia. The issue would be of interest for it provides room to examine the impact of government size on economic growth in the country. Furthermore, in the light of the undergoing process of fiscal decentralization in Indonesia, it also provides some lessons for the local authorities in the provincial and district level. To investigate the relationship, a sample of time series data from 1969 to 1999 on Indonesia is being used. The result of the econometric estimation suggests that economic growth is negatively associated with government size both in the long run and in the short run. Some possible explanations and interpretations on the finding are provided for this tendency of growth impeding nature of the relative government size in the economy. Then, some lessons for the local authorities in managing their own budget are being drawn as a note of cautions.
|Date of creation:||Jul 2003|
|Date of revision:||Jul 2003|
|Contact details of provider:|| Postal: Jalan Cimandiri No.6, Bandung 40115|
Web page: http://ceds.fe.unpad.ac.id
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Alberto Alesina & Silvia Ardagna & Roberto Perotti & Fabio Schiantarelli, 1999.
"Fiscal Policy, Profits, and Investment,"
NBER Working Papers
7207, National Bureau of Economic Research, Inc.
- Schiantarelli, Fabio & Perotti, Roberto & Ardagna, Silvia & Alesina, Alberto, 2002. "Fiscal Policy, Profits, and Investment," Scholarly Articles 4685103, Harvard University Department of Economics.
- Alesina, Alberto F & Ardagna, Silvia & Perotti, Roberto & Schiantarelli, Fabio, 1999. "Fiscal Policy, Profits and Investment," CEPR Discussion Papers 2250, C.E.P.R. Discussion Papers.
- Alberto Alesina & Silvia Ardagna & Roberto Perotti & Fabio Schiantarelli, 2000. "Fiscal Policy, Profits, and Investment," Boston College Working Papers in Economics 504, Boston College Department of Economics.
- Agell, Jonas & Lindh, Thomas & Ohlsson, Henry, 1998.
"Growth and the Public Sector: A reply,"
Working Paper Series
1999:1, Uppsala University, Department of Economics.
- Fölster, Stefan & Henrekson, Magnus, 1997.
"Growth and the Public Sector: A Critique of the Critics,"
Working Paper Series
492, Research Institute of Industrial Economics, revised 10 Jun 1998.
- Folster, Stefan & Henrekson, Magnus, 1999. "Growth and the public sector: a critique of the critics," European Journal of Political Economy, Elsevier, vol. 15(2), pages 337-358, June.
When requesting a correction, please mention this item's handle: RePEc:unp:wpaper:200302. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Arief Anshory Yusuf)
If references are entirely missing, you can add them using this form.