The political economics of the Malaysian subnational governments’ fiscal behavior
AbstractThis paper attempts to shed light on the political economy of the Malaysian state governments’ budgetary behavior by tailoring hypotheses drawn from recent theoritical literature to the Malaysian institutional context and testing them empirically. Our main objective here is to examine whether state governments’ fiscal behavior can partly be explained by the political attributes and the institutional characteristics of the government and of the legislature. In particular, we will try to analyze whether the incentives for the state governments to observe a prudent spending behavior have not been undermined by the fact that they have been able to influence relevant central government decisions regarding their finance. Our estimations results show that states that are overrepresented at the executive level tend to have higher spending and deficits. However, we don’t find any correlation between overrepresentation at the Parliament and states governments’ fiscal outcomes. This can be explained by the fact that in Malaysia as is frequently the case in developing nations, the legislature is peripheral to the executive in terms of decision making power.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 24988.
Date of creation: 2009
Date of revision:
Publication status: Published in International Journal of Management Studies 1.16(2009): pp. 261-283
State governments; Fiscal behavior; Political Economy;
Find related papers by JEL classification:
- H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
- H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
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