Does trade openness and fiscal policy affect inequality and economic growth? a study in Indonesia

Mohammad Khusaini; Setyo TRI Wahyudi; Zamrud Siswa Utama

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Does trade openness and fiscal policy affect inequality and economic growth? a study in Indonesia

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Mohammad Khusaini, Setyo TRI Wahyudi, Zamrud Siswa Utama

2018 Regional Science Inquiry Vol. 10 Issue 2 Article Cited by 3 SDG 10

Abstract

This paper examines the impact of trade openness and Indonesia's fiscal policy on income inequality and economic growth. The error correction model approach was used to analyze the effect during the period 1980 to 2015. The results show that trade openness can improve inequality but at the same time impede growth. The effect of fiscal policy on reducing inequality is only generated by tax collection but is temporary. Meanwhile, government spending on infrastructure and health proved to encourage growth. On the other hand, education sector spending and tax collection can actually hamper growth. © Copyright 2009-2018 C. A. LADIAS - HELLENIC ASSOCIATION OF REGIONAL SCIENTISTS. All Rights Reserved.

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Faculty of Economic and Business, Brawijaya University, Indonesia

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