Abstract
The study involves the application of Vector Error Correction Models (VECM) to analyze macroeconomic dimension of fiscal policy on economic growth in Indonesia and Turkey. Furthermore, it attempts to depict the paths of fiscal policy and GDP evolution in the two economies by providing data for the period 1980-2022. It uses Augmented Dickey Fuller (ADF) tests and Johansen co-integration tests to check against the stationarity and the long-run relationships between fiscal policy variables and economic growth. The result of Granger causality analysis was used to address the two-way relationship between these variables. Data discloses that the fiscal policy of Indonesia does not significantly affects economic development directly, as Turkey’s case where government expenditure does have a positive relationship with economic growth in the short term. Despite the common unstable connection between government participation, government revenue and economic growth, there exists a long-term inimical correlation in both countries. The results of the study indicate the impact of fiscal policy as non-immediate measure is not effective with regards to Indonesia economic growth. This calls attention to the role of resource reallocation in creating a lasting development rate. That is why the relationship between public spending and short-term growth shows significant effectiveness of certain fiscal policy monetary measures aimed at increasing the rates of material production and growth in the country. The research indicates that long period of government expenditure maybe unbeneficial for developing economies. Contrary to this, it is governments’ duty to determine the etymologically sound methodologies of prudent fiscal plans that will enable privatization, investments, and economic growth.Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
MBER have CC-BY-SA or an equivalent license as the optimal license for the publication, distribution, use, and reuse of scholarly work.
In developing strategy and setting priorities, MBER recognize that free access is better than priced access, libre access is better than free access, and libre under CC-BY-SA or the equivalent is better than libre under more restrictive open licenses. We should achieve what we can when we can. We should not delay achieving free in order to achieve libre, and we should not stop with free when we can achieve libre.
MBER is licensed under a Creative Commons Attribution 4.0 International License
You are free to:
- Share copy and redistribute the material in any medium or format
- Adapt remix, transform, and build upon the material for any purpose, even commercially.
- The licensor cannot revoke these freedoms as long as you follow the license terms.