The Effect of Regional Fiscal Policy on Regional Economic Growth (Study case: Provinces in Kalimantan, Indonesia)

This research paper is looking for the effect of regional fiscal policy implementation on regional economic growth in provinces in Kalimantan Island over the period when fiscal decentralization started in Indonesia, 2001 – 2011 by using panel data estimation from 4 provinces (West Kalimantan, Central Kalimantan, South Kalimantan, and East Kalimantan). The measurement of fiscal decentralization is used to analyse are Autonomy Indicator, Revenue Indicator, and Expenditure Indicator. Moreover, to see the effect of fiscal decentralization on economic growth is used control variables to support that, such as Population, Initial GDRP, Employment, and Investment. The paper concludes with there is positive relationship between fiscal decentralization and local economic growth in provinces in Kalimantan. The result shows that increase in fiscal decentralization will increase local economic growth, and other variables too except population.