Analysis of Expansive Fiscal Policy and Grants on International Trade in Indonesia

Fuddin Muhammad khoirul; Della Nurisa  Agustin

doi:10.14414/jebav.v28i1.4784

Vol. 28 No. 1 (2025), Articles

Vol. 28 No. 1 (2025)

Analysis of Expansive Fiscal Policy and Grants on International Trade in Indonesia

Articles

DOI: 10.14414/jebav.v28i1.4784

Published 30-07-2025

Fuddin Muhammad khoirul⁺⁻
Della Nurisa Agustin⁺⁻

Fuddin Muhammad khoirul

University of Muhammadiyah Malang

Della Nurisa Agustin

University of Muhammadiyah Malang

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Keywords

Current Account Balance
Government Expenditures
Grants
External Debt

How to Cite

Muhammad khoirul, F., & Agustin, D. N. . (2025). Analysis of Expansive Fiscal Policy and Grants on International Trade in Indonesia. Journal of Economics, Business, and Accountancy Ventura, 28(1), 19-40. https://doi.org/10.14414/jebav.v28i1.4784

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

Abstract

This study aims to determine the long-term and short-term effects of Government
Expenditure, External Debt, and Grants variables on the Current Account Balance.
This model uses the Vector Error Correction Model (VECM) model to achieve a long
term and short-term balance. This study uses secondary data from world banks during
the period 1983-2022 in Indonesia. This study proves that in the long run,
Government Expenditure and Grants have a significant effect on the Current Account
Balance. However, External Debt did not have a significant effect on the Current
Account Balance. On the other hand, in the short term, Government Expenditure,
External Debt, and Grants did not show a significant influence on the Current
Account Balance. This study emphasizes the importance of the role of the Current
Account Balance as the main pillar in assessing the level of economic progress in
Indonesia. Expansive fiscal policy through increased government expenditure can
strengthen the economy, especially when there is a surplus in the Current Account
Balance. In addition, external debt can be used to cover the current account deficit,
which ultimately has the potential to create a surplus. The influence of grants also has
the potential to expand the reach of international trade, which has a positive impact on
the Current Account Balance.

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Analysis of Expansive Fiscal Policy and Grants on International Trade in Indonesia

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