Fiscal Decentralization Impact on Government Size

Nadhira Afdalia (), Basri Hasanuddin, Muhammad Yusri Zamhuri and Agussalim Agussalim
Additional contact information
Nadhira Afdalia: Hasanuddin University
Basri Hasanuddin: Hasanuddin University
Muhammad Yusri Zamhuri: Hasanuddin University
Agussalim Agussalim: Hasanuddin University

A chapter in Proceedings of the 9th International Conference on Accounting, Management, and Economics 2024 (ICAME 2024), 2025, pp 1213-1222 from Springer

Abstract: Abstract Fiscal decentralization has been implemented in Indonesia for more than two decades. This study, based on the Leviathan theory of Brennan and Buchanan, examines the impact of fiscal decentralization on government size. The Leviathan theory states that decentralization can lessen the central government’s propensity to collect taxes in excess. This study’s measurement of fiscal decentralization uses the variables of expenditure decentralization, revenue decentralization, and vertical imbalance as independent variables and government size as the dependent variable. This research uses panel data from 34 provinces in Indonesia from 2013 to 2023. The research uses secondary data from the Regional Revenue and Expenditure Budget (APBD) from the Directorate General of Financial Balance website. (DJPK). The impact of independent variables on the dependent variable is examined using the multiple linear regression analysis approach. Empirical results show that the variable of expenditure decentralization increases government size, while the variable of vertical imbalance decreases government size. This finding does not align with the Leviathan hypothesis, whereas revenue decentralization reduces government size, which aligns with the Leviathan hypothesis of Brennan and Buchanan.

Keywords: Fiscal Decentralization; Revenue Decentralization; Expenditure Decentralization (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:spr:advbcp:978-94-6463-758-8_99

Ordering information: This item can be ordered from
http://www.springer.com/9789464637588

DOI: 10.2991/978-94-6463-758-8_99

Access Statistics for this chapter

More chapters in Advances in Economics, Business and Management Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().