Journal of Business & Banking
Vol 12, No 2 (2022): November 2022 - April 2023

A Cointegration and Causal Analysis of the Government Revenue and Expenditure Relationship in Indonesia

Jacobus Cliff Diky Rijoly (University of Kentucky)
Shella Gilby Sapulette (Universitas Pattimura)
Jabida Latuamury (Universitas Pattimura)
Alfrin Ernest Marthin Usmany (Universitas Pattimura)
Franco Benony Limba (Universitas Pattimura)



Article Info

Publish Date
04 May 2023

Abstract

This study aims to discuss the causal analysis of government revenues and expenditures in Indonesia in light of the fact that Indonesian fiscal policy significantly relies on government finance. Therefore, it can lead to fragile macroeconomic conditions. In addition, to illustrate this occurrence, the researchers used Granger causality method on data from 1971 to 2021 provided by the World Bank. This paper's findings indicate that in Indonesia, the long run or equilibrium relationship between government revenue and government expenditure goes from government expenditure to government revenue. In addition, this conclusion demonstrates that government expenditures affect government revenue.

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