TY - JOUR
T1 - Indonesian local government spending, taxing and saving
T2 - An explanation of pre- and post-decentralization fiscal outcomes
AU - Lewis, Blane D.
PY - 2005/9
Y1 - 2005/9
N2 - As a result of Indonesia's decentralization program, local governments have gained significantly more responsibility for service delivery, considerably larger fiscal resources, and much greater authority over the use of those resources than before. The present paper develops a simple budget model to describe and explain the substantial differences in pre- and post-decentralization local government fiscal behavior related to spending, taxing and saving. During the post-decentralization period special attention is paid to the fiscal behavior of natural resource rich regions. Among other things, the evidence suggests that: post-decentralization local government spending is partly responsive to increasing needs and partly the subject of elite capture; local government taxation has become more aggressive under decentralization and appears to be mostly driven by local bureaucratic expectations related to routine overhead budgets; and the increased savings of local governments during the post-decentralization period is determined to a large degree by delayed central government transfer payments.
AB - As a result of Indonesia's decentralization program, local governments have gained significantly more responsibility for service delivery, considerably larger fiscal resources, and much greater authority over the use of those resources than before. The present paper develops a simple budget model to describe and explain the substantial differences in pre- and post-decentralization local government fiscal behavior related to spending, taxing and saving. During the post-decentralization period special attention is paid to the fiscal behavior of natural resource rich regions. Among other things, the evidence suggests that: post-decentralization local government spending is partly responsive to increasing needs and partly the subject of elite capture; local government taxation has become more aggressive under decentralization and appears to be mostly driven by local bureaucratic expectations related to routine overhead budgets; and the increased savings of local governments during the post-decentralization period is determined to a large degree by delayed central government transfer payments.
KW - Fiscal decentralization
KW - Indonesia
KW - Intergovernmental fiscal relations
KW - Local public finance
UR - http://www.scopus.com/inward/record.url?scp=33745233516&partnerID=8YFLogxK
U2 - 10.1111/j.1467-8381.2005.00214.x
DO - 10.1111/j.1467-8381.2005.00214.x
M3 - Article
SN - 1351-3958
VL - 19
SP - 291
EP - 317
JO - Asian Economic Journal
JF - Asian Economic Journal
IS - 3
ER -