Dampak kebijakan fiskal terhadap perekonomian kabupaten dan kota di Provinsi Sulawesi Selatan

Abstract

This study aimed to analyse the impact of fiscal policy on the regencies and cities’ economy of the South Sulawesi Province. The econometric model with the system of simultaneous equations were used to analyse the panel data from 2004 to 2009 of 23 regenci es and cities. The result showed that the fiscal policies of local government, particularly, for the capital spending, either on agriculture or other sectors of capital expenditure had a positive effect on the local economy. Private investments had a positive and significant effect on output (gross regional domestic product) on seven sectors including industry, electricity gas and water, construction, trade, transportation and communications, finance, and services. In addition, private investment may also increase non - farm employment, reduce unemployment, and inflation in the region. On the other side of fiscal policy in the form of local revenues and significant negative effect on private investment. It will be a high economic cost if the local government s must explore the potential taxes and retribution.