Political Business Cycles in Local Indonesia

Bambang Suharnoko Sjahrir, Krisztina Kis-Katos and Günther Schulze

No 23, Discussion Paper Series from Department of International Economic Policy, University of Freiburg

Abstract: We study political business cycles (PBC) in newly democratized and decentralized Indonesia at the local level. As the timing of indirect and later on direct elections of district heads differs exogenously across jurisdictions, the political business cycle effect is clearly identified. Our data allow distinguishing PBCs for indirect and direct elections. We find significant budget cycles for discretionary budget categories at the disposal of the district head (not for the overall budget) only for direct elections, not for indirect elections. These cycles are much larger if the incumbent runs for reelection. Our results underline the conditional nature of PBC.

Keywords: Political business cycles; Indonesia; local elections; direct and indirect elections (search for similar items in EconPapers)
JEL-codes: H72 H76 (search for similar items in EconPapers)
Pages: 9 pages
Date: 2013-04, Revised 2013-04
New Economics Papers: this item is included in nep-pol and nep-sea
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:fre:wpaper:23

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