Muhammad Fitri Rahmadana - Faculty of Economic, State University of Medan, Medan, Indonesia
Marlon Naibaho - Faculty of Economic, State University of Medan, Medan, Indonesia

This research reviewed interdependence analysis on government income and expenditure in Indonesia, where the problem shown up here was government expenditure was always bigger than government income, though in particular years the income was bigger than government expenditure. This research aimed to view the pattern or a certain causality direction between government income and expenditure; the variables that would be tested were government income and expenditure. The data used was the time series data in the period of 1988 – 2011; the data source was obtained from Statistics Central Bureau of Indonesia. The method used was Granger Causality. The research result showed that government income and government expenditure was not stationary on its base data but on the first derivative. Between government income and expenditure had unidirectional causality, which was both of those variables, got a long-term correlation and both had a quick adaptation for that. Government expenditure would be able to effect government income five years after government expenditure was allocated.

Government income, government expenditure, Granger Causality