Reviewing the Evidence: How Key Fiscal Instruments Associated with Opportunistic Behavior?

Aims: This review examines how key fiscal instruments—Local Own-Source Revenue (PAD), General Allocation Funds (DAU), Special Allocation Funds (DAK), Revenue-Sharing Funds (DBH), the flypaper effect, and budget surpluses (SiLPA)—are associated with opportunistic fiscal behavior in Indonesia, particularly during periods of heightened political competition. It also highlights gaps in post-2020 evidence and integrates findings across fiscal instruments to provide a more updated and comprehensive perspective. Study Design: A systematic literature review. Place and Duration of Study: The review covers peer-reviewed empirical studies published between 2020 and 2025 within Indonesia's fiscal governance context, sourced primarily from SINTA-indexed journals. Methodology: Ten empirical studies were systematically selected based on relevance to opportunistic fiscal behavior and regional budgeting. A qualitative synthesis was conducted to compare political–fiscal dynamics across studies, focusing on how political incentives influence budgetary variables such as PAD, DAU, DAK, DBH, SiLPA, and the flypaper effect. Results: Findings consistently show that intergovernmental transfers (DAU, DAK, DBH) and SiLPA significantly contribute to opportunistic fiscal behavior, with several studies reporting positive and statistically significant relationships between transfer size and politically motivated spending increases. The flypaper effect appears persistently, indicating that increases in transfers lead to disproportionately higher expenditure—particularly around election periods. SiLPA provides incumbents with flexible fiscal space that can be strategically used for political advantage. Evidence for PAD is mixed, with several studies reporting insignificant effects, suggesting limited influence on opportunistic actions. Conclusion: Fiscal instruments—especially intergovernmental transfers and SiLPA—play a central role in enabling opportunistic practices within regional budgeting. Strengthening transparency, improving audit quality, and enhancing regulatory oversight are crucial for reducing manipulation and ensuring that regional budgets reflect public welfare priorities rather than political incentives. Future research should expand post-2025 evidence, incorporate cross-provincial comparisons, and explore how institutional quality moderates the relationship between political competition and fiscal opportunism.