Do Regional Heads Utilize Capital Expenditures, Grants, and Social Assistance in the Context of Elections?

Chanif Rizqiyati and Doddy Setiawan ()
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Chanif Rizqiyati: Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia
Doddy Setiawan: Faculty of Economics and Business, Universitas Sebelas Maret, Surakarta 57126, Indonesia

Economies, 2022, vol. 10, issue 9, 1-15

Abstract: This study empirically analyzes the alleged existence of political budget cycles in Indonesian local governments. Using panel data, this quantitative study concentrates on capital expenditures, grant expenditures, and social assistance expenditures in the election year and the year before the election. The purposive sampling method is used to take the sample—a local government that experienced two election cycles from 2012 to 2018. The sample consists of 1306 observational data points on capital expenditures and grants, and 636 observational data points on social assistance. The study tests its hypothesis using multiple regression analysis. The results indicate that the election year negatively affects capital expenditures, positively affects grants, and has no effect on social assistance. The year before the election negatively affects capital expenditures, but positively affects grants and social assistance. The incumbent positively affects social assistance but does not affect capital expenditures and grants. Transfers have a negative effect on capital expenditures, a positive effect on grants, and no effect on social assistance. The interactions of the election year and year before the election with the incumbent is not proven in this study.

Keywords: political budget cycles; election; incumbent; regional head (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2022
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