JEFMS Journal

ABSTRACT:

The purpose of this study was to determine the effect of government spending (Education, Health, Housing and Public Facilities, and Social Protection), GRDP, DAU, and population on the poverty of the provinces in Indonesia. The method in this study uses the Regression Vector Error Correction Model (VECM) panel model with 32 provinces. The data used is secondary data with a period of 2010-2020 sourced from the Central Statistics Agency (BPS), the Directorate General of Fiscal Balance (DJPK), and provincial sites from each region.

The results of the study indicate that in the short term poverty itself, education, and PFU have a significant influence on the poverty of the provinces in Indonesia. In the long term, the estimation results show that Education, PFU, DAU, and Population have a significant effect on Poverty. The advantage of the results from this VECM panel is that it can predict in the long term through the trend of these variables in the future Variance Decomposition (VD) and Impulse Response Function (IRF) shock effects.

KEYWORDS:

Regional Expenditure, Dynamic Panel, Balance Fund, Poverty, Variance Decomposition.
JEL : C53, E17, E62, H50

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