Incentives and Economic Growth In Indonesia: Policy Reference to COVID-19 Recovery

The query whether government expenditure will effectively assist economic recovery amidst Covid-19 outbreak is still puzzled. For instance, Chang and Velasco (2020) argued that the space for government’s incentives in tackling the severity of pandemic is unce tain, however, may be quite large. Further, it is also essential to consider that the paucity of evidence-based literature in the context of causal relationship between government expenditure and economic growth have led to a renewed empirical research and attracted a lot of interest from economists in the last decade. In this frame of refer- ence, to indicate whether government expenditure causes economic growth or economic growth causes increased government expenditure is the fundamental issue that continuously arise.