ANALYSIS OF CONVERGENT SIGMA AND CONVERGENT BETA REVENUE AND EXPENDITURE OF REGENCY/CITY GOVERNMENT IN THE SPECIAL REGION OF YOGYAKARTA

Abstract

The era of fiscal decentralization requires every region to be more optimal in managing their Regional Revenue and Expenditure Budget (APBD). However, due to the differences in the characteristics of each region, fiscal decentralization encourages the existence of regional budget gaps. This analysis explored the convergence of district/city government revenues and expenditures in the Special Region of Yogyakarta in 2011-2019 based on the sigma and beta convergence models. This study uses a quantitative approach that describes data in numerals or percentages and econometric analysis in the form of panel data regression (data pool). Panel data combines data, cross-section, five regencies/cities in DIY, and data for time series 2011-2019. The data needed in this study is the Realization of Regional Revenue and Expenditure data, as well as data on the control variables, namely the population, economic growth, and inflation sourced from the Central Statistics Agency and the Directorate General of Fiscal Balance, Ministry of Finance of the Republic of Indonesia. The calculation of sigma convergence uses the coefficient of variants, while the beta convergence calculation uses panel data regression analysis with a fixed-effect model approach. The results showed that Regency/City Revenues and Expenditures in DIY had not experienced sigma convergence because the average coefficient of variants of each revenue and expenditure was 3.51% and 3.29%; however, there was a tendency to experience convergence because the coefficient of variants has decreased from year to year. Conditional beta convergence, which includes control variables, shows a tendency for acceptance convergence with a convergence speed of 0.478%, and the length of time required to cover half the gap (half-life) is 16.83 years. Explanatory variables such as population and economic growth have accelerated revenue convergence. Meanwhile, the conditional beta also shows a tendency for spending convergence which takes 19.04 years with a convergence speed of 0.420%, where only the population variable is proven to accelerate the convergence of spending.
 Keywords: Convergence; Regional Revenue; Regional Expenditures.