The cyclicality of government expenditure in developing country: the case of Indonesia
This paper analyzes the cyclicality and the relationship between government expenditure and output of Indonesia, 1999-2012 using Johansen co-integration test and the error correction model. The results confirm that in the short-run the government expenditure reveals counter-cyclical but pro-cyclical...
Saved in:
| Main Author: | |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Universitas Islam Indonesia
2014-04-01
|
| Series: | Economic Journal of Emerging Markets |
| Subjects: | |
| Online Access: | https://journal.uii.ac.id/JEP/article/view/3864 |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | This paper analyzes the cyclicality and the relationship between government expenditure and output of Indonesia, 1999-2012 using Johansen co-integration test and the error correction model. The results confirm that in the short-run the government expenditure reveals counter-cyclical but pro-cyclical in the longrun. Output and government expenditure are co-integrated and it implies the existence of long-term relationship. The value of short-run elasticity coefficient for government expenditure is relatively high. In contrast, the long-run elasticity coefficient is lower and statistically greater than unity confirming the voracity hypothesis. Furthermore, there is no significant difference of government spending in good and bad times. |
|---|---|
| ISSN: | 2086-3128 2502-180X |