Tag: O4

GOVERNMENT EXPENDITURES COMPOSITION AND GROWTH IN EU15: A DYNAMIC HETEROGENEOUS APPROACH

Lena MALEŠEVIĆ PEROVIĆ

Associate professor University of Split, Faculty of Economics, Business and Tourism, CERGE EI Teaching Fellow Cvite Fiskovića 5, 21000 Split, Croatia, Tel: + 385 21 430 683, Fax: + 385 21 430 701

lena@efst.hr

Silvia GOLEM

Associate professor University of Split, Faculty of Economics, Business and Tourism, Cvite Fiskovića 5, 21000 Split, Croatia, Tel: + 385 21 430 673, Fax: + 385 21 430 701

sgolem@efst.hr

Abstract

The goal of this paper is to investigate the long-run effect of government size and composition on growth in EU15 countries during 1995-2014. Unlike previous studies, this paper employs a more adequate and sophisticated econometric technique which allows the joint occurrence of dynamics and parameter heterogeneity as well as addresses the problem of unobserved common factors. The obtained results indicate that high aggregate spending levels are an impediment for growth in developed economies, while the single most important government expenditure item is education. In quantitative terms the impact of education expenditures is, however, significantly lower than that found by other papers.

Keywords: government size, expenditures composition, GDP growth, heterogeneity, unobserved common effects, EU15

JEL classification: C23, H1, H50, O4
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IS THERE A CAUSALITY RELATIONSHIP BETWEEN LOCAL TAX REVENUE AND REGIONAL ECONOMIC GROWTH? A PANEL DATA EVIDENCE FROM INDONESIA

Khairul AMRI

Lecturer at Faculty of Islamic Economics and Business, Universitas Islam Negeri (UIN) Ar-raniry, Banda Aceh, Indonesia

Email: khairul.amri@ar-raniry.ac.id

NAZAMUDDIN

Lecturer at Faculty of Economics and Business, Universitas Syiah Kuala, Banda Aceh, Indonesia

Email: nazamuddin@unsyiah.ac.id

Raja MASBAR

Lecturer at Faculty of Economics and Business, Universitas Syiah Kuala, Banda Aceh, Indonesia

Email: raja.masbar53@gmail.com

Hasdi AIMON

Lecturer at Faculty of Economics and Business, Universitas Negeri Padang, Padang, Indonesia

Email: s3dkpl@gmail.com

Abstract

The main objective of the study is to investigate the causal relationship of economic growth, local tax revenue, and local retribution revenue in Indonesia. A panel data set of 24 provinces over the period of 2003-2015, and then, Pedroni’s and Kao’s Co-integration test, Panel Vector Error Correction Model (PVECM) and Granger causality test were applied to analyze the relationship between the variables. The finding of the study indicates that in the long run, there would be a negative relationship between local tax revenue and regional economic growth and a positive and significant relationship between local tax revenue and local retribution revenue. Granger causality test proved that there is bi-directional causality between local tax revenues and economic growth, and uni-directional causality running from local retribution revenue to economic growth and local tax revenue.

Keywords: Local tax revenue, local retribution revenue, economic growth, and Panel Vector Error Correction Model

JEL classification: H71, O4
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THE MACROECONOMIC IMPACT OF REGIONAL MINIMUM WAGEs: A CROSS-PROVINCE DATA EVIDENCE FROM INDONESIA

Khairul AMRI

Ph.D Student in Economic Science, Faculty of Economic and Business Syiah Kuala University Banda Aceh, Indonesia, Lecture in Faculty of Islamic Economics and Business, State Islamic University Ar-Raniry, Banda Aceh Indonesia

khairul.amri@ar-raniry.ac.id

Abstract

The main purpose of our study is to determine the causality relationship between economic growth, regional minimum wages (RMWs), unemployment rate and labor force participation rate (LFP). Using cross-section data set of 27 provinces from Indonesia for the period of 2003-2015, data analyzed using panel co-integration test, panel vector error correction model, and Granger causality test. Panel co-integration test indicates that there is a long-run relationship between the variables. In the long-run, LFP positively related to the economic growth, and negatively related to RMWs. The unemployment is positively related to both the economic growth and RMWs. In the short-run, RMWS has a significant and positive effect on economic growth. The unemployment and LFP have a negative and significant effect on RMWs. LFP has a negative and significant effect on unemployment and RMWs has a positive and significant effect on LFP. Furthermore, economic growth has a negative and significant effect on LFP. The result of Granger causality test points out that there is a bidirectional causality relationship between economic growth and RMWs and between RMWs and LFP. In addition, unemployment rate causes RMWs, and LFP causes unemployment.

Keywords: Economic growth, regional minimum wages, labor force participation, unemployment and panel vector error correction model

JEL classification: J31, O4, R23
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