چکیده:
This paper aims to investigate the effect of budget deficit shock on government spending in Indonesia. For this propose, this reasearch uses an alternative error correction model based on loss function of government spending. The model assumes the short run disequilibrium, in which shock variables may play an important role. A spesific loss function model is applied to develop the long run government hypothetical model. Using data of the period 1970-2010, the empirical model shows that real GDP, tax revenue and multi period shock of budget deficit are statistically significant in determining the government spending, both for operating and development spending. In other words, this finding also shows the significant impact of unanticipated of budget deficit on the government spending. It implies a weaknes of government finance management, in which government spending has not created new tax sources.
خلاصه ماشینی:
"Using data of the period 1970-2010, the empirical model shows that real GDP, tax revenue and multi period shock of budget deficit are statistically significant in determining the government spending, both for operating and development spending.
Further observation and research on the relationship between government spending and other economic variables, especially such as shock of budget deficit both in the short and the long term period, therefore, is important to be conducted.
Data This research estimates two equations, there are government spending for operating and, for development models with each model having three independent variables, Gross Domestic Product (GDP, tax revenue (TR) and budget deficit (BD).
Estimates of Johansen Cointegration Test به تصویر صفحه مراجعه شود))Note: LX = log (X); * indicate 5 percent level of significance In order to estimate the empirical model of government spending, it needs a shock variable of budget deficit as an independent variable.
In the long term, it also explains that government spending both for operating, and development projects not only depends on real GDP and tax revenue, but also depends on multtiperiod shock of budget deficit with three periods of time lag.
5. Conclusion This paper has attempted to identify the effect of budget deficit shocks on government spending by developing an error correction model based on the loss function approach.
The empirical model shows that real GDP, tax revenue and multi period shock of budget deficit variables are statistically significant in the two government spending models."