Contribution of Fiscal Deficit and State Consumption to Indonesia's Gross Domestic Product (GDP)
DOI:
https://doi.org/10.65886/ijde.v1i3.51Keywords:
Fiscal Deficit, State Consumption, Economic Growth, Gross Domestic Product, ARDL, Short Run, Long RunAbstract
This study aims to analyze the effect of fiscal deficits and state consumption on Indonesia's economic growth in the period 1990 to 2023. In this study, economic growth is proxied by Gross Domestic Product (GDP) in logarithmic form (ln_gdp), while fiscal deficit (df) and state consumption (ln_kn) become independent variables. The method used is Autoregressive Distributed Lag (ARDL) to test the short-run and long-run relationship between variables with time series data. The estimation results show that in the short run, fiscal deficit has a negative and significant effect on economic growth, while state consumption has a positive effect. In the long run, state consumption continues to show a strong positive effect, while the impact of fiscal deficits tends to weaken. Diagnostic tests such as heteroscedasticity, autocorrelation, and model stability through the CUSUM graph show that the model meets classical assumptions and is structurally stable. These findings indicate that efficient government spending can boost economic growth, while the increase in fiscal deficit needs to be controlled so as not to suppress national economic performance.
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