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This study examines zakat as a fiscal tool to support household consumption during inflation and its interaction with government social spending in Indonesia.

May 14, 2026International Journal of Islamic and Middle Eastern Finance and Management

Zakat as a counter-cyclical welfare instrument: macroeconomic evidence from Indonesia

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This study examines zakat as a fiscal tool to support household consumption during inflation and its interaction with government social spending in Indonesia.
Utilized provincial-level panel data from 34 provinces in Indonesia for 2020–2024.
Applied fixed effects regression models with macroeconomic controls such as income and unemployment.
Incorporated interaction terms to analyze effects across different income groups.
Zakat significantly increased household consumption, particularly aiding low-income groups.
Mitigation of inflation's negative effects on consumption was evident among households receiving zakat.
Zakat and government social spending demonstrated mutual reinforcement in enhancing welfare effects during economic shocks.

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Implication

The study examines zakat's impact on consumption in Indonesia, highlighting its collaborative role with government social spending.

Cite This Study

Rama et al. (2026) studied this question.

synapsesocial.com/papers/6a05680ea550a87e60a205ed https://doi.org/10.1108/imefm-12-2025-0972

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Zakat as a counter-cyclical welfare instrument: macroeconomic evidence from Indonesia

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Discussion

Implication

Cite This Study

Zakat as a counter-cyclical welfare instrument: macroeconomic evidence from Indonesia

Key Points

Discussion

Implication

Cite This Study

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