WHAT DETERMINES LOCAL GOVERNMENT SPENDING? EMPIRICAL EVIDENCE IN EASTERN INDONESIA
Roosemarina Anggraini Rambe, Purmini, Izharudin, Levia Veronika

Development Economics Department, Faculty of Economics and Business, University of Bengkulu

Abstract

The purpose of this study is to examine the impact of taxes, transfers, and GRDP on local government spending in eastern Indonesia. The analytical method used is panel data regression, which involved 13 provinces from 2014 to 2022. The results show that the best model is the fixed effect model. With the FEM, the test results of the F-test and t-test show that H0 is rejected. Taxes, transfers, and GRDP significantly positively affect local government spending. The economy should be supported and maintained with appropriate regulations to promote a conducive business climate. Furthermore, this condition will encourage an increase in local government spending.

Keywords: Government spending, GRDP, Taxes, Transfers

Topic: Public economics