Dynamic Poverty Response to Government Budget in Aceh Province

The aim of this study is to examine short-run and long-run response of poverty to local government expenditure especially capital investment budget and personnel expenditure budget of Aceh Province. The model in this study is panel ARDL to examine the dynamic poverty response to government expenditures in Aceh Province by using panel data for 23 districts in Aceh from 2008 to 2018 with a total of 253 samples. The results show that government budget on capital spending has no significant effect on poverty reduction in the long-run, but significant in the short-run. Meanwhile, the government budget on personnel expenditure has a significant effect on poverty reduction in the long-run. It is recommended that budget allocation on capital expenditure should be added to reduce poverty in Aceh Province because this budget is relatively small compared to personnel expenditure.