The Size of Flypaper Effect in Decentralizing Indonesia

Tengku Munawar Chalil

MPRA Paper from University Library of Munich, Germany

Abstract: This study explores the flypaper effect in Indonesia using a spatial approach. Covering data from 2000-2014, the paper shows that grants stimulate overspending by local governments even though spatial interdependence is carefully treated. The elasticity of lump-sum grants to expenditure is stronger than the elasticity of matching grants. Further, the elasticity of lump-sum grant is greater on routine expenditure, which shows the over-dependency of local governments to lump-sum grant. The over-dependency phenomenon has not changed a lot even after a major change of lump-sum grant formulation being applied by the 2004 decentralization law package.

Keywords: flypaper effect; intergovernmental transfer; local government expenditure (search for similar items in EconPapers)
JEL-codes: D72 D78 H72 I31 (search for similar items in EconPapers)
Date: 2018-07-19
New Economics Papers: this item is included in nep-sea and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/88037/1/MPRA_paper_88037.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/98358/1/MPRA_paper_88037.pdf revised version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:88037

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter (winter@lmu.de).