Flypaper Effect in Indonesia: The Case of Kalimantan

Yarlina Yacoub ()
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Yarlina Yacoub: Faculty of Economics and Business, Tanjungpura University, Indonesia Author-2-Name: Nindya Lestari Author-2-Workplace-Name: Faculty of Economics and Business, Tanjungpura University, Indonesia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:

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Abstract: Objective - Changes in financial authority as a result of decentralization are expected to make provinces in Indonesia become more flexible in approving their finances. However, it goes beyond central government transfers which make local governments more consumptive, which impacts on the phenomenon of the effect of flypaper. This study aims to identify the influence of the government's fiscal on regional expenditure and identify the effect of flypaper on the regional expenditure in Kalimantan.Methodology/Technique � The research uses panel data from 56 regencies and cities on Kalimantan Island. Pooled least square method is used.Findings � The results show that intergovernmental fiscal revenue has a significant relationship with expenditure. Further, the flypaper effect occurs in regional expenditure which means that districts and cities in Kalimantan are still dependent on the central government to finance regional expenditures. They are not able to maximize their respective regional income.Novelty � These results indicate that the existence of local revenue derived from taxes has not been able to be optimally absorbed. Thus, dependence on intergovernmental transfers is very high. In addition, the flypaper effect also indicated that the intervention of the central government came into regional development planning programs.Type of Paper - Empirical.

Keywords: Flypaper Effect; Intergovernmental Transfer; Fiscal; Grants. (search for similar items in EconPapers)
JEL-codes: B22 D02 H21 H3 (search for similar items in EconPapers)
Pages: 6
Date: 2019-12-31
New Economics Papers: this item is included in nep-sea and nep-ure
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Citations: View citations in EconPapers (1)

Published in Journal of Finance and Banking Review, Volume 4, Issue 4

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