IPB University Expert Analyzes the Impact of Accelerated Government Spending on Economic Growth in 2024
Professor of IPB University, Prof Bambang Juanda, analyzed the impact of accelerated spending on economic growth. He revealed important findings regarding the effect of the timing of capital expenditure on the economy. He conveyed this in the Brown Bag Seminar for the Second Edition of 2024 held by the Directorate General of Treasury of the Ministry of Finance (Kemenkeu) RI, recently.
The IPB University lecturer from the Department of Economics explained that government capital expenditures often accumulate at the end of the year, especially in the fourth quarter. This causes the impact on economic growth to be less than optimal. “Capital expenditure should be accelerated and spread more evenly throughout the year, not just at the end of the year. This way, the positive impact on economic growth can be greater,” he suggested.
In his study, Prof Bambang highlighted that despite improvements in capital expenditure scheduling in recent years, results show that the distribution of capital expenditure is still often concentrated in the last quarter. He suggested the use of more detailed data to analyze the trend of expenditure from 2015 to 2022 to reveal any improvements or problems in the pattern of capital expenditure.
According to Prof Bambang, the appearance of capital expenditure data from minimum, maximum, to average is not enough to illustrate the dynamics of accelerated spending.
“We need to display the movement of data in a model that can illustrate how accelerated spending can affect economic growth more clearly,” he emphasized.
In addition, Prof Bambang also noted that the study should pay attention to the correlation between central and regional government spending. “Regional spending, which is often a transfer from the center, can affect the overall effectiveness of capital spending. Therefore, caution is needed in analyzing and explaining the allocation of central transfers to regions,” he added.
Prof Bambang also discussed the issue of multicollinearity in the economic models used, which can affect the interpretation of research results. He suggested using methods such as principal component regression or difference to overcome this problem.
In future research, Prof Bambang expects a more detailed explanation of the impact of government spending on economic growth. Therefore, he emphasized the importance of clarifying the relationship between spending variables and economic growth in the model used, as well as paying attention to the lag or delay in the effect of spending on the economy.
Overall, Prof Bambang Juanda emphasized the need for improvements in capital expenditure analysis methods to ensure that accelerated spending can maximize its impact on economic growth. (MW/Rz) (IAAS/HLF)
