Assesing The Relationship Between Oil Rent, Energy Consumption, And Government Expenditure In Indonesia

Abstract

This study was conducted in Indonesia to analyze the relationship between oil rent, energy consumption, and government spending. This study uses annual data obtained from world bank publications. The data analysis method used is VECM. This study finds in Indonesia, there is a three-way casual relationship between energy use and oil rent, but no causal relationship between variables. This indicates in the greater Indonesian energy consumption, the higher the profit level of Indonesia's oil and gas sector. Energy consumption has no impact on government expenditure in Indonesia. So that the policy of limiting the consumption of fossil fuels such as environmental taxes does not significantly suppress the state's development from government expenditure and can actually increase state revenues so that it has the potential to increase development. Suggestions for future research is to include including environmental tax variables to measure potential environmental tax revenues in Indonesia.