Planning Consistency and the Political Budget Cycle in Indonesia

This study aims to find empirical evidence of the relationship between planning and the practices associated with political budget cycles in Indonesia, with reference to the simultaneous regional head elections held in 2017 and 2018. A fixed-effect method using least-square dummy variables analyzes the role of planning in the relationship between local-government spending and political budget cycle behaviors. The results indicate that consistency between planning and budgeting can control the discretion applied by regional heads to increase and decrease budget expenditure in the two years before an election, one year before an election and in the election year itself. The magnitude of these reductions or increases differs between types of expenditure. The association between planning and the political budget cycle is significant in the two years before an election for primary expenditure allocations and in a year before an election for allocations of capital expenditure, social assistance, and grants and subsidies.

Public Finance

This chapter gives an overview of public finance in Germany. In the first part, it describes the process of public budgeting, the main principles, and the budget cycle. Finally, it reports on budget reforms. Subsequently, it delivers information on the volume and structure of expenditure and revenue, the latter with a special focus on the tax system, the system of multilevel tax distribution among the levels of government and on public debt. The chapter refers also to the legal framework for public budgeting and accounting standards that differ between the levels of the Federation and the states. Some special information on local finance in Germany is also included.

The role of the economic sciences professional in the budgetary cycle

In this paper, the intervention of the economics professional in the different stages of the budget cycle will be addressed. The professional in economic sciences to whom we refer, is the one established in 1973 in law 20.488 (public accountant, bachelor of administration, bachelor of economics and actuary), who has an active role in the administration of the public sector more precisely in its intervention in the budget cycle. The scope of the study of this cycle is made up of different stages that, although they are specified successively within the same cycle, at the same time overlapping with the stages of the previous and subsequent cycles in time. In these stages one of the main instruments of any democratic State is specified: the public budget will have as many definicions as ways of looking at it. The work is complemented by a description of professional performance in them and the importance of interdisciplinary work.

Entitlement programmes for garnering votes? The impact of local elections on targeted social protection in decentralised Indonesia

Purpose The purpose of this paper is to find the relationship between local direct elections and the change in social spending, controlling for GDP per capita, revenues and wide-range socio-welfare indicators at the regional level. Design/methodology/approach This research uses a model of time-series cross-sectional panel data set for 33 provinces in Indonesia from 2001 to 2012. Findings The main finding of this research is that the political budget cycle does exist in Indonesia. Incumbents responded to the direct elections more sensitively rather than to other variables in the model. The most important variables that are significant in the model are not only direct election but also inter-governmental grants. Interestingly, the local economy (as measured by GDP per capita) does not clearly exhibit a meaningful impact. Research limitations/implications Although the importance of decentralisation in Indonesia is actually at the regency level, obtaining the data is really challenging. Therefore the exercise on this paper is currently limited only for the provincial level. Practical implications This finding conveys the message that there is large room for improvement in inter-governmental transfer formulation, more importantly to the regions where they still entail significant budget support from central government. In addition, transfers during specific periods such as elections need to be modified to avoid the misappropriation of local budget and to mitigate the adverse impact of PBC. The formulation of inter-governmental transfers is pivotal in reducing over-dependence to the central government funding and to ensure the effectiveness of budget devolved at the local level. Originality/value To the author’s understanding, the paper is the first to discuss the presence of the political budget cycle on social protection programs in Indonesia. The expected contribution of the current work is twofold: Firstly, the author used a recent data set hosted by the World Bank (INDO-DAPOER). Secondly, the findings are relevant to the discussion within the sphere of development studies and political science.

Institutional Determinants of Budgetary Expenditures. A BMA-Based Re-Evaluation of Contemporary Theories for OECD Countries

The article tackles the problem of the most important institutional determinants of public expenditures. Within the traditions of public choice and institutional economics, it tests several theories ranging from the fiscal commons framework, Political Business/Budget Cycle (PBC) and path dependence to veto players theory. Its novelty compared to previous research stems from an attempt to test several theories simultaneously, dealing with model uncertainty by using sensitivity analysis within the Bayesian Model Averaging framework with a vast prior structure in terms of model, g and multicollinearity dilution priors. The results confirm several hypotheses tested in the area of fiscal management across the recent decades within the group of developed economies, giving especially strong support to the tragedy of the fiscal commons and path dependence concepts, while only partial support to veto players theory. In contrast, explanations based on political budget cycle (PBC) theory are dismissed. Among other interesting findings reported in the study, Scandinavian countries turn out to be the most fiscally responsible when other institutional factors are taken into account. Similarly, contrary to other recent research into the issue of EU fiscal institutional framework, Euro area countries are characterized by limited public expenditures.