This study verifies the Keynes's hypothesis and Wagner's law between local expenditure and regional economic growth using panel data of 16 metropolitan cities and provinces from 2002 to 2020. We use the Dumitrescu-Hurlin panel causality test and CS-ARDL estimation method considering the cross-sectional dependence and heterogeneity of panel data. The results of analysis are as follows. A causal relationship is established in both directions between local expenditure and regional economic growth. Local expenditure is positive for regional economic growth, and regional economic growth is positive for local expenditure. In other words, both the Keynes's hypothesis and Wagner's law are valid in the local economy. According to the Keynes's hypothesis, an increase in local expenditure has a positive effect on regional economic growth, and according to Wagner's law, local expenditure expands as an economic growth. Therefore, local governments should consider economic growth and policy management of fiscal spending and come up with measures to improve the efficiency of fiscal spending for a virtuous cycle of local financial expenditure and regional economic growth.