The Effect Of Fiscal Policy And Investment On Economic Performance In Sulawesi Provinces, Indonesia

Fiscal policy and investment are two economic variables that can affect a country's economic performance. The focus of this research is trying to uncover the effect of fiscal and investment policies on economic performance by taking the case in the Sulawesi region in Indonesia. Government spending, general allocation funds and direct spending are used as a proxy for fiscal policy, to test its effect on economic growth and unemployment is used as a proxy for economic performance. A panel dynamic simultaneous equation model with annual time series from 2011 to 2021 was used to test this effect. It was found that general allocation funds, direct spending, and unemployment had a positive effect on economic growth. Investment has no effect on economic growth. The relationship between direct spending and unemployment has a positive impact on economic growth, while general allocation funds have a negative impact. Furthermore, general allocation funds and economic growth have a positive effect on unemployment, while direct spending and investment have no effect on unemployment. Specifically, general allocation funds and economic growth on unemployment are positive.