Abstract
This study aims to analyze (1) the effect of DAU on economic growth, (2) the effect of DAK on economic growth, (3) the effect of income distribution inequality on economic growth, (4) the influence of the Village Fund on income distribution inequality, (5) the effect of growth the economy against inequality of income distribution. The data used were sourced from the Ministry of Finance through the Directorate General of Fiscal Balance and the Indonesian Central Statistics Agency during the 2015-2018 period, the unit of analysis was 33 provinces in Indonesia. This study uses a simultaneous equation regression model with the two stage least square (2SLS) regression technique with the Fixed Effect Model (FEM). The results showed that, (1) general allocation funds have a positive and significant effect on economic growth, which means that any increase in general allocation funds will be followed by an increase in economic growth. (2) special allocation funds have a negative and significant effect on economic growth. This means that any increase in special allocation funds will make economic growth decline. (3) income distribution inequality has a negative and significant effect on economic growth, which means that any increase in income distribution inequality can as much as reduce economic growth. (4) the variable of village funds has a negative and not significant effect on the inequality of income distribution, which means that any increase in village funds will make the income distribution inequality decrease. (5) economic growth variable has a negative and significant effect on inequality of income distribution, which means that any increase in economic growth can reduce inequality of income distribution decreases.
 
 Keywords: DAU, DAK, Village Funds, Economic Growth, Inequality of Income Distribution.
Highlights
Economic growth in poor countries initially tended to cause high levels of poverty and inequitable distribution of income
The rate of economic growth in Indonesia in 2018 grew to reach 5.17 percent, this figure increased compared to economic growth in 2017 which amounted to 5.07 percent, this increase was driven by all categories of business fields where the highest growth was achieved by Other Service Business Fields that grew 9.22 percent. (Official Gazette of the Statistics, 2018)
It can be concluded that the DAU, DAK, and GR variables have a significant effect on economic growth in 2015-2018, and for the DD, and EG variables significantly influence the Inequality of income distribution during 2015-2018
Summary
Economic growth in poor countries initially tended to cause high levels of poverty and inequitable distribution of income. The balance funds allocated have a positive impact on economic growth in each province as well as the rate of national economic growth which is always increasing every year. This is evidenced by the national economic growth rate that continues to increase. It seems clear that growth is not significant enough to correct inequality This can be seen in the level of inequality in Indonesia according to rural housing as measured by the Gini Ratio in March 2018 yesterday recorded at 0.324, this figure rose by 0.004 compared to the conditions of September 2017 and March 2017 which amounted to 0.320
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