Investment and Government Expenditure and Investment Economic Growth in Central Java, Indonesia

Abstract

The role of government expenditure in economic growth is very important. The aim of this paper was to study the government expenditure and investment on economic growth in Central Java. The data used was the secondary data from 2000.1 to 2018.4. The analysis tool used was Error Correction Model (ECM). The test of cointegration testing used Johansen test of cointegration which was used to test the presence of a long-term relationship in the variables economic growth, expenditure approach and investment. The analysis results using the regression method of Error Correction Model indicate that the effect of the variable of government expenditure on output is positive and significant, both in the short and long term.