Does Tax Effort Moderate the Effect of Government Expenditure on Regional Economic Growth? A Dynamic Panel Data Evidence from Indonesia
Articles
Khairul Amri
Faculty of Islamic Economics and Business, Universitas Islam Negeri Ar-Raniry, Banda Aceh
Raja Masbar
Faculty of Economics and Business, Universitas Syiah Kuala, Banda Aceh
B. S. Nazamuddin
Faculty of Economics and Business, Universitas Syiah Kuala, Banda Aceh
Hasdi Aimon
Faculty of Economics, Universitas Negeri Padang, Padang
Published 2023-10-04
https://doi.org/10.15388/Ekon.2023.102.2.1
PDF
HTML

Keywords

Economic growth
local tax effort
government expenditure
GMM estimation

How to Cite

Amri, K. (2023) “Does Tax Effort Moderate the Effect of Government Expenditure on Regional Economic Growth? A Dynamic Panel Data Evidence from Indonesia”, Ekonomika, 102(2), pp. 6–27. doi:10.15388/Ekon.2023.102.2.1.

Abstract

Our research study aims to analyze the effect of government expenditure on goods and services and capital toward regional economic growth in Indonesia. We position local tax effort as a moderating variable between economic growth and government expenditures. Using a panel data set of 24 provinces in Indonesia from 2006 to 2015, a dynamic model of GMM was applied to estimate the effect of public expenditure on growth. The research study provides empirical evidence that the two kinds of public spending positively and significantly affect economic growth. Conversely, local tax efforts negatively affect economic growth. Besides, local tax efforts also reduce the positive impact of capital expenditure on economic growth. In other words, local tax efforts negatively moderate the influence of government expenditure on the output growth of the regional economy.

PDF
HTML
Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Downloads

Download data is not yet available.