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Fiscal competitions among Indonesian municipalities: a spatial econometric analysis

Tengku Munawar Chalil ()
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Tengku Munawar Chalil: Osaka University

Asia-Pacific Journal of Regional Science, 2020, vol. 4, issue 1, 241-260

Abstract: Abstract The theory of the yardstick competition argues that the voters may compare their administration performance with their jurisdiction neighbors. This paper analyzes the presence of yardstick competition shapes in municipal finances. The competition mechanism prevails the effects of the neighbor’s tax setting, allocation preference, public service provision, and awarded competitive grants to a local government decision. I show these effects by examining the Indonesian municipality’s data from 2000 to 2014 by a spatial economics approach. Later, I test the consistency of the effects of the yardstick competition to the voting results. However, it appears that the neighborhood performance does not have significant impact to the voter gauge.

Keywords: Yardstick competition; Public spending; Spatial interaction; Indonesian municipalities (search for similar items in EconPapers)
JEL-codes: D72 H72 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s41685-019-00138-3

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