THE IMPACT OF THE RELATIONSHIP BETWEEN GOVERNMENT EXPENDITURE AND POVERTY IN INDONESIA 1993-2023
DOI:
https://doi.org/10.65886/ijde.v2i02.32Keywords:
Government Expenditure, Poverty Reduction, Fiscal Policy, Time Series Analysis, Keynesian TheoryAbstract
Poverty is a multidimensional problem that remains a major challenge in Indonesia, despite annual increases in government spending. This study aims to analyze the impact of government spending on poverty levels in Indonesia during the period 1993–2023. Using a quantitative approach, this study examines the causal relationship between total government spending and poverty levels. Time series data were obtained from the World Bank and analyzed using simple linear regression, and tested through classical assumption tests such as normality, multicollinearity, heteroscedasticity, and autocorrelation. The results of the study indicate that government spending has a negative and significant effect on poverty levels, with a regression coefficient of -16.57 and a significance value of 0.000. This means that a one-unit increase in government spending can reduce poverty by 16.57 units. This finding supports Keynesian theory, which emphasizes the importance of active government intervention in addressing economic imbalances. However, the effectiveness of government spending also depends heavily on institutional quality and targeted budget allocation.
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