Year: 2023 | Month: December | Volume: 10 | Issue: 12 | Pages: 519-541
DOI: https://doi.org/10.52403/ijrr.20231256
Analysis of the Impact of Regional Fiscal Policy on Economic Growth in North Sumatra
Joe Fry Alwin Sinurat1, Sukardi2, Ahmad Albar Tanjung3
1Postgraduate Students Faculty of Economics and Business, Department of Economics, Universitas Sumatera Utara, Indonesia
2,3Postgraduate Lecturer Faculty of Economics and Business, Department of Economics, Universitas Sumatera Utara, Indonesia
Corresponding Author: Joe Fry Alwin Sinurat
ABSTRACT
This study discusses the impact of regional fiscal policy on economic growth in North Sumatra. In this study also carried out the detection of fiscal illusion (flypaper effect) in fiscal policy undertaken by the local government districts/cities in North Sumatra. This study was conducted by analyzing quantitative data, that is, the data provide an overview of events using numbers, which then the results will be compared with theories and empirical evidence of relevant previous research results. The Data used in this study in the form of panel data (pool data). The results of this study showed that local revenue has a positive and significant effect on regional spending, general allocation funds have a positive and significant effect on regional spending, special allocation funds have a positive and significant effect on regional spending, simultaneously local revenue, general allocation funds, special allocation funds simultaneously have a positive and significant effect on regional spending districts / cities, directly local revenue has a positive and significant effect on economic growth proxied by Gross Regional Domestic Product, regional expenditure has a positive and significant effect on economic growth proxied by Gross Regional Domestic Product, Local revenue and local expenditure significantly affect economic growth proxied with Gross Regional Domestic Product and based on the results of research in relation to fiscal illusion from previous research can be mentioned that the fiscal illusion has occurred for a long time and in various regions in Indonesia and even in various regions in other countries. Local governments make the balance funds as the main source of revenue.
Keywords: Local Revenue, Local Spending, Unconditional Grant, Growth, And Fiscal Illusion.
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