Received: 2019-04-06  |  Accepted: 2019-05-20  |  Published: 2019-06-30

Title

Does the Wagner’s Law exist in a strategic national area? An evidence from Kedungsepur - Indonesia


Abstract

The Kedungsepur National Strategic Area was formed to realize urban areas as the center of national and international economic activities. In order to realize this goal, government expenditure and economic growth are important variables in the development process. Empirically, the study was conducted to analyze the relationship between government expenditure and economic growth from the perspective of Wagner's Law in 6 regencies or cities in the Kedungsepur National Strategic Area during 2012 to 2017. Methodically, this study used Panel Granger Causality and Panel Data Regression to explain the short-term relationship between both variables. The results showed that there was a negative one-way relationship from economic growth to government expenditure. The increase in economic growth in the previous year would reduce the government expenditure in the short term, resulting the Wegner's Law inapplicable in the Kedungsepur National Strategic Area. This was due to the ineffectiveness of institutions, differences in regional expenditure structures towards state expenditures and the lack of government work programs in the productive sector. Thus, a good and coordinative institutional environment was needed to realize the cooperation in crucial sectors, as well as the distribution of regional expenditures on more productive expenditures based on priority interests, aiming at the welfare of the community.


Keywords

Wagner’s law, economic growth, government expenditure, panel Granger causality, panel data regression


JEL classifications

E60 , R11 , R58


URI

http://jssidoi.org/ird/article/8


DOI


HAL


Pages

99-117


Funding

This research was supported by the project, which has received funding from the Satya Wacana Christian University under the 2018 internal competitive funding program for the scheme of university basic research.

This is an open access issue and all published articles are licensed under a
Creative Commons Attribution 4.0 International License

Authors

Sasongko, Gatot
Satya Wacana Christian University, Salatiga, Indonesia http://www.uksw.edu
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Huruta, Andrian Dolfriandra
Satya Wacana Christian University, Salatiga, Indonesia http://www.uksw.edu
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Wardani, Anita
Satya Wacana Christian University, Salatiga, Indonesia http://www.uksw.edu
Articles by this author in: CrossRef |  Google Scholar

Journal title

Insights into Regional Development

Volume

1


Number

2


Issue date

June 2019


Issue DOI


ISSN

ISSN 2345-0282 (online)


Publisher

VšĮ Entrepreneurship and Sustainability Center, Vilnius, Lithuania

Cited

Google Scholar

Article views & downloads

HTML views: 2181  |  PDF downloads: 1212

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