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Political Cycles, Government Spending, and Efficiency of Indonesia' Local Governments

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  • Chalil, Tengku Munawar

Abstract

The paper presents a test of the relationship between rational political cycles with the government spending behavior and its efficiency by using extensive data set of whole Indonesian municipalities/cities from 2008-2014. The results show that politicians/local leaders in Indonesia tend to maximize their preference during the election year but anticipate the election time through strategy to deceive voters.

Suggested Citation

  • Chalil, Tengku Munawar, 2018. "Political Cycles, Government Spending, and Efficiency of Indonesia' Local Governments," MPRA Paper 88082, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:88082
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    File URL: https://mpra.ub.uni-muenchen.de/88082/10/MPRA_paper_88082.pdf
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    References listed on IDEAS

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    1. Rosenberg, Jacob, 1992. "Rationality and the Political Business Cycle: The Case of Local Government," Public Choice, Springer, vol. 73(1), pages 71-81, January.
    2. Sergio Sakurai & Naercio Menezes-Filho, 2008. "Fiscal policy and reelection in Brazilian municipalities," Public Choice, Springer, vol. 137(1), pages 301-314, October.
    3. Rogoff, Kenneth, 1990. "Equilibrium Political Budget Cycles," American Economic Review, American Economic Association, vol. 80(1), pages 21-36, March.
    4. Sjahrir, Bambang Suharnoko & Kis-Katos, Krisztina & Schulze, Günther G., 2013. "Political budget cycles in Indonesia at the district level," Economics Letters, Elsevier, vol. 120(2), pages 342-345.
    5. Sakurai, Sergio N. & Menezes, Naercio A., 2008. "Fiscal policy and reelection in Brazilian municipalities," Insper Working Papers wpe_117, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
    6. William D. Nordhaus, 1975. "The Political Business Cycle," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 42(2), pages 169-190.
    7. Baleiras, Rui Nuno & da Silva Costa, Jose, 2004. "To be or not to be in office again: an empirical test of a local political business cycle rationale," European Journal of Political Economy, Elsevier, vol. 20(3), pages 655-671, September.
    8. Adi Brender & Allan Drazen, 2008. "How Do Budget Deficits and Economic Growth Affect Reelection Prospects? Evidence from a Large Panel of Countries," American Economic Review, American Economic Association, vol. 98(5), pages 2203-2220, December.
    9. Linda Veiga & Francisco Veiga, 2007. "Political business cycles at the municipal level," Public Choice, Springer, vol. 131(1), pages 45-64, April.
    10. Blais, Andre & Nadeau, Richard, 1992. "The Electoral Budget Cycle," Public Choice, Springer, vol. 74(4), pages 389-403, December.
    11. Allan Drazen & Marcela Eslava, 2005. "Electoral Manipulation via Expenditure Composition: Theory and Evidence," NBER Working Papers 11085, National Bureau of Economic Research, Inc.
    12. Kumbhakar,Subal C. & Lovell,C. A. Knox, 2003. "Stochastic Frontier Analysis," Cambridge Books, Cambridge University Press, number 9780521666633, January.
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    Cited by:

    1. Salvador Traettino, 2022. "Migración forzada y finanzas públicas locales: Evidencia de los municipios en Colombia," Documentos CEDE 20335, Universidad de los Andes, Facultad de Economía, CEDE.

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    More about this item

    Keywords

    election; political cycles; government expenditure;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

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