| Summary: | The essence of decentralized government is bring the government closer to its
people. In particular, local government using budget for routine and development
program. But the other side, local government related with macroeconomic
variable such as economic growth. Government program must support economic
growth through planning the expenditure.
The purpose of this research is to examine the relationship between local
provincial expenditure and economic growth in Indonesia. To test the hypothesis,
we analyze aggregate and disaggregate data from local provincial government in
Indonesia. Broadly, the evidence, support that the relation between local
expenditure (aggregate or disaggregate data) and economic growth are exist. This
evidence can broaden our understanding of the political economy of budget
beyond formally.
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