Does Government Spending Reduce Poverty in Local Economies? A Dynamic GMM Analysis
Poverty has been a challenge for economic development in various regions in Indonesia. This study offers empirical insights into the effectiveness of fiscal policy as a strategic development instrument in reducing poverty. This study investigates the impact of local government spending on poverty a...
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Jurusan Ekonomi Pembangunan Fakultas Ekonomi Universitas Sriwijaya
2025-06-01
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| Series: | Jurnal Ekonomi Pembangunan |
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| Online Access: | https://jep.ejournal.unsri.ac.id/index.php/jep/article/view/23360 |
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| author | Cut Dian Fitri Khairul Amri |
| author_facet | Cut Dian Fitri Khairul Amri |
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Poverty has been a challenge for economic development in various regions in Indonesia. This study offers empirical insights into the effectiveness of fiscal policy as a strategic development instrument in reducing poverty. This study investigates the impact of local government spending on poverty alleviation in Jambi Province, addressing a critical challenge in regional economic development. We specifically examine the effects of expenditures on health, education, and economic functions on poverty levels. Utilizing panel data from 11 districts and cities in Jambi Province between 2016 and 2023, we employ a dynamic Generalized Method of Moments (GMM) model for robust analysis. Our empirical results indicate that health and economic function expenditures significantly reduce poverty levels. Conversely, while education spending exhibits a negative correlation with poverty, this effect is not statistically significant. These findings highlight the importance of optimizing regional budget allocations, particularly towards health and economic programs, as a practical implication for effective poverty reduction strategies in Jambi Province. This research contributes to understanding the nuanced role of local fiscal policy in addressing poverty in decentralized contexts.
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| format | Article |
| id | doaj-art-8d97d4420c274c0499862962cf895ce2 |
| institution | DOAJ |
| issn | 1829-5843 2685-0788 |
| language | English |
| publishDate | 2025-06-01 |
| publisher | Jurusan Ekonomi Pembangunan Fakultas Ekonomi Universitas Sriwijaya |
| record_format | Article |
| series | Jurnal Ekonomi Pembangunan |
| spelling | doaj-art-8d97d4420c274c0499862962cf895ce22025-08-20T02:40:20ZengJurusan Ekonomi Pembangunan Fakultas Ekonomi Universitas SriwijayaJurnal Ekonomi Pembangunan1829-58432685-07882025-06-0123110.29259/jep.v23i1.23360Does Government Spending Reduce Poverty in Local Economies? A Dynamic GMM AnalysisCut Dian Fitri0https://orcid.org/0000-0003-0795-1784Khairul Amri1https://orcid.org/0000-0001-6334-7245Department of Economics, Faculty of Islamic Economics and Business, UIN Ar-Raniry Banda Aceh, IndonesiaDepartment of Economics, Faculty of Islamic Economics and Business, UIN Ar-Raniry Banda Aceh, Indonesia Poverty has been a challenge for economic development in various regions in Indonesia. This study offers empirical insights into the effectiveness of fiscal policy as a strategic development instrument in reducing poverty. This study investigates the impact of local government spending on poverty alleviation in Jambi Province, addressing a critical challenge in regional economic development. We specifically examine the effects of expenditures on health, education, and economic functions on poverty levels. Utilizing panel data from 11 districts and cities in Jambi Province between 2016 and 2023, we employ a dynamic Generalized Method of Moments (GMM) model for robust analysis. Our empirical results indicate that health and economic function expenditures significantly reduce poverty levels. Conversely, while education spending exhibits a negative correlation with poverty, this effect is not statistically significant. These findings highlight the importance of optimizing regional budget allocations, particularly towards health and economic programs, as a practical implication for effective poverty reduction strategies in Jambi Province. This research contributes to understanding the nuanced role of local fiscal policy in addressing poverty in decentralized contexts. https://jep.ejournal.unsri.ac.id/index.php/jep/article/view/23360Poverty rateGovernment expenditureGMM Estimation |
| spellingShingle | Cut Dian Fitri Khairul Amri Does Government Spending Reduce Poverty in Local Economies? A Dynamic GMM Analysis Jurnal Ekonomi Pembangunan Poverty rate Government expenditure GMM Estimation |
| title | Does Government Spending Reduce Poverty in Local Economies? A Dynamic GMM Analysis |
| title_full | Does Government Spending Reduce Poverty in Local Economies? A Dynamic GMM Analysis |
| title_fullStr | Does Government Spending Reduce Poverty in Local Economies? A Dynamic GMM Analysis |
| title_full_unstemmed | Does Government Spending Reduce Poverty in Local Economies? A Dynamic GMM Analysis |
| title_short | Does Government Spending Reduce Poverty in Local Economies? A Dynamic GMM Analysis |
| title_sort | does government spending reduce poverty in local economies a dynamic gmm analysis |
| topic | Poverty rate Government expenditure GMM Estimation |
| url | https://jep.ejournal.unsri.ac.id/index.php/jep/article/view/23360 |
| work_keys_str_mv | AT cutdianfitri doesgovernmentspendingreducepovertyinlocaleconomiesadynamicgmmanalysis AT khairulamri doesgovernmentspendingreducepovertyinlocaleconomiesadynamicgmmanalysis |