Public Finance on Economic Growth in Terms of Financial Literacy and Human Capital

English

Abstract

The purpose of this study is to find out more about the role of public finances on economic growth in terms of financial literacy and human resources shown by the development of education and health infrastructure. We use data for the period 1995 to 2020 with annual data from the OJK and the world bank with adjusted calculations. Where monthly data from OJK related to financial literacy and budget infrastructure is one year and annual data from the world bank covering education development, GDP, and health infrastructure are used as the data we get. We use the ARDL model to understand the causal relationship of each variable. We find that the Indonesian government's infrastructure (IB) budget has a substantial beneficial relationship with GDP in both the short and long term. Development Education in the short term has a substantial beneficial effect on economic development but has a large beneficial impact on GDP in the long run. The same is true for health infrastructure, which has an insignificant positive effect on GDP temporarily but has a sizeable long-term beneficial impact. Financial literacy has a measurable beneficial impact both in the short and long term. Budget and financial literacy are closely related to public finances which have an impact on various sectors of people's lives and ultimately have an impact on economic growth and national economic development in Indonesia.