Analysis of government expenditure and environmental quality: An empirical study using provincial data levels in Indonesia

Abstract

The improvement of environmental quality is expected to increase along with the delegation of financial management authority to regional governments by the decentralization policy. The policy is expected to affect the handling of environmental problems in the regions. This study analyzes the influence of regional government expenditure variables and aggregate economic output variables at the regional level on environmental quality. This study uses cross-section data of 33 provinces in Indonesia in the period 2013-2018. Empirical studies were analyzed using panel data regression models. The results show that government expenditure has a positive and significant effect on the environmental quality index. The economic aggregate output variable has a positive and significant effect on the environmental quality index in Indonesia. This may imply that a rise in the quality of Indonesia's environment is indicated by economic growth through a surge in aggregate economic output.