Open AccessThe Effect of Government Debt on Indonesia's Economics Growth
Author(s) -
Trian Hutaria,
Bambang Juanda,
Yeti Lis Purnamadewi
Publication year - 2019
Publication title -
international journal of scientific research in science, engineering and technology
Language(s) - English
Resource type - Journals
eISSN - 2395-1990
pISSN - 2394-4099
DOI - 10.32628/ijsrset196523
Subject(s) - capital expenditure , economics , gross domestic product , deficit spending , government expenditure , debt to gdp ratio , debt , government debt , monetary economics , aggregate expenditure , real gross domestic product , government (linguistics) , internal debt , macroeconomics , public finance , finance , linguistics , philosophy
The current development in Indonesia had changed the structure of the budget, because an increased in government expenditure had caused budget deficits. One of solutions to overcome budget deficit is debt. During the period 2014-2017 the government debt profil had an average growth of 13%, which was higher than the average of economic growth. This study aims to analyze the effects of government debt on the Gross Domestic Product (GDP) via three types of government expenditure during the period of 1981-2017. The method used in this research was Two Stage Least Square with the simultaneous regression. The result show that government debt had significant effect on capital and regional expenditure, but did not significantly influence employee expenditure. Meanwhile, the capital and regional expenditure had significant effects on GDP. The highest multiplier effect affecting GDP was regional expenditure.