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Vol. 23 No. 1 (2025): Jurnal Ekonomi Pembangunan
Submitted
May 19, 2025
Accepted
June 27, 2025
Published
June 30, 2025
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Abstract

Poverty has been a challenge for economic development in various regions in Indonesia. This study offers empirical insights into the effectiveness of fiscal policy as a strategic development instrument in reducing poverty. This study investigates the impact of local government spending on poverty alleviation in Jambi Province, addressing a critical challenge in regional economic development. We specifically examine the effects of expenditures on health, education, and economic functions on poverty levels. Utilizing panel data from 11 districts and cities in Jambi Province between 2016 and 2023, we employ a dynamic Generalized Method of Moments (GMM) model for robust analysis. Our empirical results indicate that health and economic function expenditures significantly reduce poverty levels. Conversely, while education spending exhibits a negative correlation with poverty, this effect is not statistically significant. These findings highlight the importance of optimizing regional budget allocations, particularly towards health and economic programs, as a practical implication for effective poverty reduction strategies in Jambi Province. This research contributes to understanding the nuanced role of local fiscal policy in addressing poverty in decentralized contexts.

Keywords

Poverty rate Government expenditure GMM Estimation

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How to Cite
Fitri, C. D., & Amri, K. (2025). Does Government Spending Reduce Poverty in Local Economies? A Dynamic GMM Analysis. Jurnal Ekonomi Pembangunan, 23(1), 61–70. https://doi.org/10.29259/jep.v23i1.23360
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