Analysis of the Impact of Operational Expenditure and Capital Expenditure on Economic Growth in Kutai Kartanegara Regency (2012–2024)

Abstract

This study examines the empirical impact of operational expenditure, capital expenditure, and the COVID-19 pandemic shock on regional economic growth in Kutai Kartanegara Regency, East Kalimantan, over the period 2012–2024. Within the fiscal decentralization framework, local budget allocation (APBD) serves as a key fiscal policy instrument to stimulate regional economic activities. Employing a quantitative approach with Ordinary Least Squares (OLS) multiple linear regression on a 13-year time-series dataset, this study tests hypotheses derived from Keynesian Macroeconomic Theory and Musgrave’s Theory of Public Finance. All diagnostic tests confirm that the specified regression model satisfies the classical OLS assumptions (normality, non-multicollinearity, homoscedasticity, and absence of severe autocorrelation). The simultaneous F-test results demonstrate that operational expenditure, capital expenditure, and the pandemic dummy variable collectively exert a statistically significant effect on economic growth (F = 6.932; p = 0.010), explaining 59.7%

of the variance in Real Regional Gross Domestic Product (Adjusted R2 = 0.597). Partial hypothesis testing (t-test) reveals that Operational Expenditure (p = 0.002) has a strong, positive, and statistically significant impact on economic growth, making it the most dominant fiscal stimulus driver in the region. Conversely, Capital Expenditure (p = 0.237) and the Pandemic Dummy variable (p = 0.359) show no statistically significant partial effects on economic growth. These empirical findings indicate that operational expenditure plays a crucial role as a direct short-term fiscal injection in sustaining aggregate demand in Kutai Kartanegara, consistent with Keynesian multiplier mechanisms. Meanwhile, the lack of immediate statistical significance for capital expenditure underscores the existence of severe implementation time lags and high volatility in public capital investments, highlighting the need for strategic fiscal reorientation toward productive infrastructure.