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Fiscal competitions among Indonesian municipalities: a spatial econometric analysis

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  • Tengku Munawar Chalil

    (Osaka University)

Abstract

The theory of the yardstick competition argues that the voters may compare their administration performance with their jurisdiction neighbors. This paper analyzes the presence of yardstick competition shapes in municipal finances. The competition mechanism prevails the effects of the neighbor’s tax setting, allocation preference, public service provision, and awarded competitive grants to a local government decision. I show these effects by examining the Indonesian municipality’s data from 2000 to 2014 by a spatial economics approach. Later, I test the consistency of the effects of the yardstick competition to the voting results. However, it appears that the neighborhood performance does not have significant impact to the voter gauge.

Suggested Citation

  • Tengku Munawar Chalil, 2020. "Fiscal competitions among Indonesian municipalities: a spatial econometric analysis," Asia-Pacific Journal of Regional Science, Springer, vol. 4(1), pages 241-260, February.
    • Handle: RePEc:spr:apjors:v:4:y:2020:i:1:d:10.1007_s41685-019-00138-3
    DOI: 10.1007/s41685-019-00138-3
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    More about this item

    Keywords

    Yardstick competition; Public spending; Spatial interaction; Indonesian municipalities;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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