The Effect of Government Expenditures and Tax on Investment and Economic Growth in Indonesia

Abstract

Fiscal policy is an economic policy to guide to better the economic condition by changing the government's revenue and expenditure. Keynesian model theoretically expect that investment should be pushed by government expenditure, which in turn increases economic growth. This research aims are: 1) to analyze the effect of government expenditure and tax revenue on private investment in Indonesia; 2) to analyze the effect of government expenditure and tax revenue on economic growth in Indonesia; and 3) to analyze the effect of government expenditure and tax revenue on economic growth through private investment in Indonesia.  The indirect effect on economic growth is only government expenditure through investment.

Keywords: Government expenditure, tax revenues, private investment, economic growth.