The Effect of Inflationary Process of Government Revenue and Debt on Inflation in Indonesia: An Ardl Bounds Test Approach

The objective of this paper is to examine the cause inflation based on fiscal policy perspective where government revenue and debt such an inflationary process, meaning that if these two variables do not controlled properly, they will lead higher level inflation. Using annual data from 1972 2016 ARDL bounds test approach process data, result co integration shows are simulaneously have long run relationship. This supported with short relation for each independent variable individually. In run, has positive impact lower in long-run compared short-run. Furthermore also both rather run. As local governments depend heavily national their resources, study important because any decision affect them.