A Hypothetical Analysis of Expenditure Components on The GDRP Growth of Medan City Before and After the Pandemic: A Keynesian Conceptual Approach

Abstract

This study examines the relationship between aggregate expenditure components and the growth of the Gross Regional Domestic Product (GRDP) of Medan City during the 2010–2024 period through the lens of Keynesian theory. The COVID-19 pandemic fundamentally altered the structure of the regional economy, necessitating a comparative analysis of the expenditure components before and after the pandemic. A quantitative method using multiple linear regression on time-series data was applied. The results indicate a high predictive power of the model (R² = 0.990). Household consumption (β = 0.530; p < 0.001), gross fixed capital formation (β = 0.254; p = 0.020), and net export (β = 0.026; p = 0.001) were found to have a significantly positive effect on GRDP growth. Conversely, government consumption, non-profit institutions’ consumption, and inventory changes showed no significant impact. These findings confirm the Keynesian proposition that aggregate demand components are the primary determinants of regional economic output. Policy implications suggest that stimulating household consumption and infrastructure investment constitutes the most effective strategy to accelerate Medan City’s economic growth in the post-pandemic period.