Local Government Spending Research Articles

Besides tit for tat: The effect of US 301 tariffs on Chinese local government spending

Many studies have shown that the US-China trade war has harmed China's exports and economy. This paper analyzes whether local governments respond to US 301 tariffs through public spending. Using the variation of tariff exposure across cities, this paper finds that the tariff shock led local governments to increase public spending, mainly on social security and employment. Heterogeneity analysis indicates this effect was more pronounced in cities with higher openness, lower fiscal pressure, and lower saving levels. Robustness tests are provided.

Local Government Spending: Policing Versus Social Services

US cities have recently increased the share of their budgets devoted to policing and decreased the share devoted to social services. However, a growing body of research demonstrates that social services can durably reduce crime, raising the question of whether spending more on police and less on social services reduces crime in the short term only to increase it in the long term. This review addresses this question by first recounting recent trends in municipal budgeting. Then, it summarizes the causal evidence for which local government functions best reduce crime, focusing on policing, education, employment, and housing. Research suggests that education spending efficiently and durably reduces crime with fewer negative externalities than policing but with longer delays. Evidence that housing and employment spending suppresses crime is promising but nascent. Finally, the review recommends turning renewed scholarly attention to government budgets and the root causes of crime trends.

Free education policy and rural Residents' happiness: Financial perspective

Using data from the 2010–2015 China General Social Survey, we applied a propensity score matching difference-in-differences model to examine how a 12-year free-education policy reform affected the happiness of Chinese rural residents. We found that the 12-year free-education pilot will make rural residents happier if the local government's spending on education does not reduce spending on other public services. We also found that the policy has benefited the beneficiaries' grandparents, high-income rural families, and relatively well-educated groups mainly by improving family finances and health. We recommend expanding the pilot program to increase the number of beneficiaries. We suggest that China would be in a position to fully implement the 12-year compulsory education only when the central and local governments can support its implementation.

The influence of fiscal transparency on expenditure by regional and provincial governments in Vietnam

The intricate relationship between budget transparency and government expenditure has been confirmed, with a particular focus on how these dynamics are influenced by spatial and temporal factors. This study deals with the spatio-temporal effects of transparent communal budgets on local government spending, specifically across the 63 provinces in Vietnam. By analyzing data over time, the study uncovers critical insights into how the disclosure of budget information influences government spending patterns, both in the short term and the long term. The findings reveal a nuanced relationship, where both the direct and indirect effects of budget transparency on expenditure tend to be negative, suggesting that increased transparency may lead to a reduction in government spending. This trend is observed from both a short-term perspective, where immediate changes in budget disclosure affect spending, and a long-term perspective, where the effects of sustained transparency become more evident. The study highlights significant regional disparities in the impact of budget transparency on government expenditure. It finds that the influence of budget disclosure is less pronounced in northern Vietnam compared to the southern regions. The results advocate for policies that support targeted resource allocation at the provincial or regional levels. Such tailored approaches are essential for achieving more effective and equitable government budget management, ensuring that transparency initiatives are adapted to the specific needs and conditions of different regions within Vietnam. Overall, this research contributes to the broader understanding of how transparency in budgetary processes can influence government spending. By highlighting the spatial and temporal dimensions of this relationship, the study provides valuable insights for policymakers seeking to enhance fiscal accountability and optimize public resource allocation in Vietnam.

Do intergovernmental interactions increase government spending?

ABSTRACT This study investigates yardstick competition in local government spending in South Korea. By leveraging the exogenous variation introduced by by-elections, the study estimates the influence of neighbouring jurisdictions on local expenditures. The findings reveal no significant interdependence in spending among South Korean municipalities, which contrasts with previous empirical studies from other countries. The results suggest that conventional spatial econometric methods may overestimate the degree of interdependence in local spending.

The relationship between culture and sustainable development goal compliance at the municipal level

AbstractThis study assesses the role of culture in achieving the sustainable development goals (SDGs) in the Spanish public sector, focusing on the influence of local government cultural spending and education levels on SDG compliance in municipalities. Cultural spending, considered as a percentage of total non‐financial local government spending, municipal education levels and SDG implementation indicators from the Sustainable Development Solutions Networks (SDSN)‐Spain are used in this research, which employs an ordinary least squares regression and two‐stage least squares analysis for robustness. The results suggest that higher levels of education correlate with SDG compliance, while increased spending on culture does not. Since the existing research about the impact of culture on the SDGs is limited, this study addresses this gap. It suggests that policymakers should promote culture and integrate sustainability into education to increase SDG awareness and implementation.

‘Two sides of the same coin’? A longitudinal analysis evaluating whether financial austerity accelerated NHS privatisation in England 2013-2020

ObjectivesTo understand the relationship between increasing privatisation of the NHS and austerity cuts to public funding.DesignLongitudinal analysis.Setting170 Clinical Commissioning Groups (CCGs) in England between 2013 and 2020.InterventionThe UK austerity programme,...

Population growth in growing and declining cities: the role of balanced-budget increases in local government spending

Tiebout sorting describes people moving to communities that most closely match people's preferences over taxes and public services. This Tiebout equilibrium is disturbed when cities vote to increase taxes and spending. We study the effect of increased taxes and public spending on population growth in growing and declining cities. Using regression discontinuity to compare otherwise similar cities, we find increasing local government taxes and spending by 15% can increase population growth rates. The increase is only evident the year after the vote. For the general sample, the increase is 0.4 percentage points, but it is 0.8 percentage points (25% of a standard deviation) for growing cities with below-median percentages of elderly residents. In cities with declining population, passing large tax levies increases population growth rates by 0.9 percentage points the year after the vote—33% of a standard deviation. Instead of cutting taxes and services, cities with declining population might instead consider providing additional public services to stem population declines. Most migration studies use a fairly large geographical unit like states, counties, and urban areas; our study contributes to the literature by studying migration at the local government level (cities, villages, and townships).

THE EFFECT OF LOCAL GOVERNMENT EXPENDITURE ON DEVELOPMENT INEQUALITY WITHIN AND OUTSIDE JAVA ISLAND

This study aims to determine the effect of local government spending on infrastructure, education and health sectors on development inequality in Java and the Eastern Region. This research uses a quantitative approach, using panel data consisting of 18 provinces over a period of five years (2017-2021). The data analysis involves three main steps: (1) testing the model using the Chow test, Hausman test, and Lagrange multiplier test; (2) conducting classical assumption tests including normality, multicollinearity, and heteroscedasticity tests; and (3) performing hypothesis testing using t-test, F-test, and determination coefficient (R²) test. Research results shows that spending in the infrastructure sector has a negative impact on development gaps. Every 1% increase in local government spending on infrastructure can reduce the development gap by 1%. On the other hand, spending in the education sector has a positive and significant impact, where a 1% increase in spending will increase the development gap by 1%. Expenditures in the health sector do not have a significant impact on the development gap between Java Island and the Eastern Region.

Adoption of Property Tax Expenditure and Limitations by U.S. States

Property tax expenditure and limitations (TELs) are key tools used by U.S. states to control local government spending and taxing authority. This paper employs a multiple events history analysis to understand the factors influencing the adoption of county-level property tax TELs by state governments. The findings show that external factors such as policy learning, competition, imitation, and coercion play crucial roles in this process. Notably, the study reveals that higher out-migration rates and the presence of voter-based ballot initiatives significantly increase the likelihood of TEL adoption. Additionally, the spread of TELs is influenced more by national trends rather than neighboring state actions, highlighting the saliency of these policies. These findings shed light on the dynamics of policy diffusion and provide insights into the interplay between state-level decisions and local government financial autonomy. The study’s implications extend beyond public finance, offering a nuanced understanding of policy adoption and diffusion in federal systems.

Local government spending and mental health: Untangling the impacts using a dynamic modelling approach

This study investigated the impact of local government spending on mental health in England between 2013 and 2019. Guided by the “Health in All Policies" vision, which encourages the integration of health in all decision-making areas, we explored how healthcare and multiple nonmedical budgeting decisions related to population mental health. We used random curve general cross-lagged modelling to dynamically partition effects into the short-run (from t to t + 1) and long-run (from t to t + 2) impacts, account for unobserved area-level heterogeneity and reverse causality from health outcomes to financial investments, and comprehensive modelling of budget items as an interconnected system. Our findings revealed that spending in adult social care, healthcare, and law & order predicted long-term mental health gains (0.004–0.081 SDs increase for each additional 10% in expenditure). However, these sectors exhibited negative short-term impulses (0.012–0.077 SDs decrease for each additional 10% in expenditure), markedly offsetting the long-term gains. In turn, infrastructural and environmental spending related to short-run mental health gains (0.005–0.031 SDs increase for each additional 10% in expenditure), while the long-run effects were predominantly negative (0.005–0.028 SDs decrease for each additional 10% in expenditure). The frequent occurrence of short-run and long-run negative links suggested that government resources may not be effectively reaching the areas that are most in need. In the short-term, negative effects could also imply temporary disruptions to service delivery largely uncompensated by later mental health improvements. Nonetheless, some non-health spending policies, such as law & order and infrastructure, can be related to long-lasting positive mental health impacts.

Well-being Effects of a Subsidy Retention Fund for Renovation of Dwellings of Locked-in Owners in Ghent.

With its subsidy retention fund, the city of Ghent targets homeowners, who live in a dwelling of bad quality and do not have the resources to renovate or move out. Being in this no-choice situation, they are locked-in homeowners. Through this innovative policy instrument, Ghent aims to improve the quality of its housing stock targeting households who may not take up other renovation-encouraging instruments. To reach the households who would otherwise not be able to renovate, important efforts in outreaching and offering technical and social guidance accompany the renovation subsidy. Guidance activities substantially increase the cost of the instrument, but in reaching the households living in bad-quality houses, it has the potential to create major benefits not only technically but also socially as housing quality is related to well-being. Generally, the identification of a causal relationship is difficult as well-being and its mediators are complex matters. This case offered a unique opportunity to collect information from the beneficiaries on a range of well-being domains both before the renovation of their dwelling and after the renovation. Even though the research was restricted to short-term effects, the results suggest that improvements in different domains of well-being can be linked to the improvement of housing quality. These improvements in well-being in Ghent show that (local) government spending in housing renovation of locked-in homeowners can be an instrument to achieve social progress.

IMPLEMENTASI DESENTRALISASI FISKAL DALAM UPAYA MENGENTASAN KEMISKINAN DI KABUPATEN DAN KOTA PROVINSI JAWA BARAT

The implementation of fiscal decentralization is driven by the belief that the regional government is the vehicle that best understands the needs of regional communities rather than the central government. This delegation of authority is then followed by budget allocation and provision of public goods to the regional government. This then opens up a new assessment that simply fiscal decentralization has an impact on poverty alleviation. However, the report on the implementation of fiscal decentralization over two decades in Indonesia shows that the rapidly increasing allocation of transfer funds has not been accompanied by a rapid reduction in poverty rates. Therefore, this research aims to determine the effect of fiscal decentralization indicators on the percentage of poverty, namely local government revenue, fiscal balance transfers and local government spending. By using Panel Least Square (PLS) regression estimates, we used specific samples based on districts and cities in West Java from 2014 to 2019. The regression results show that regional income can significantly reduce poverty, while the allocation of fiscal balance transfers makes poverty increase. Apart from that, local government spending was found to have no significant influence on the percentage of poverty. This paper is expected to help the government in carrying out financial management that is right on target. The ineffective allocation of balanced transfers in West Java needs to be responded by the regional government according to the priority scale in each disctrict or city.

Features of expenditure of local budgets of different types in the Russian Federation.

The paper analyzes the directions of using the budgetary funds of local governments, which made it possible to identify the main items of their expenditures. This study is aimed at identifying the main directions of local government spending for various types of municipalities, at determining the sufficiency of funds allocated for socially significant areas. The general situation in terms of the sufficiency of financial resources made it possible to characterize the results of calculations, both of the main areas of expenditure obligations, and of total expenditures at constant prices. An analysis of the structure of budget expenditures for different types of municipalities made it possible to identify the main expenditure components in local budgets of various types. The results of the performed analysis will be useful for determining the directions for improving the fiscal policy in order to achieve the required level of spending in the most important socially significant areas.

Communes’ Expenditure on Municipal Waste Management in Terms of Sustainable Development

Theoretical background: As we work towards achieving sustainable development under Goal 12, which entails promoting sustainable consumption and production patterns, one of our key tasks is to minimize waste generation through prevention, reduction, recycling, and reusing. Local government units (LGUs) have a significant role to play in implementing this task. By investing in municipal waste management, LGUs can influence the behavior of residents toward responsible waste collection and management, including hazardous waste. Purpose of the article: This article aims to evaluate how local government spending affects municipal waste management in different voivodeships. The hypothesis of this paper is that local government expenditure improve waste management effects. To achieve effective spending that supports sustainable development, public authorities at the regional level must coordinate their activities and adapt to EU standards. Research methods: This article used literature and statistical analysis to adopt dynamics indicators and correlation coefficients. Data on selected variables for the study came from the Local Data Bank of the Central Statistical Office and Eurostat. Main findings: According to the analyses conducted, there has been a positive development in municipal waste management in Polish communes. This suggests that the government’s policies are contributing towards achieving the sustainable development goal of responsible and sustainable waste management, especially when it comes to hazardous waste. These findings could be utilized to recommend to public authorities the necessary changes to fiscal instruments that would promote sustainable public finances.

Local Government Expenditures, Institutional Quality and the Inclusive Economic Development Index (Iedi) in Indonesia

The purpose of this study was to determine the effect of local government spending and institutional quality on the inclusive economy in Indonesia. To avoid the problems of endogeneity and omitted variable bias, the method used in this study is the system generalized method of moments (GMM). It was found that local government spending on housing and social functions positively and significantly affected the Inclusive Economic Development Index (IEDI). In contrast, government spending on health had a significant negative effect. Spending on education had an insignificant negative effect, while investment had a positive and significant effect on IEDI. The corruption rate as a proxy for the quality of institutional processes had a significant adverse impact on IEDI. This study provides an overview of the role and influence of local government policies and institutional quality that affect the region’s development and inclusive economic growth.

On the numerical structure of local and nationwide government spending multipliers: what can we learn from the Greek crisis?

ABSTRACT It has been recognised that the fiscal multiplier is a function of structural features of the economy and policy reaction parameters. Moreover, the debate on the magnitude of the multiplier along the business cycle has also been the subject of disputed debates. On these grounds, we look at the Greek case by calibrating a NUTS-2 interregional general equilibrium model using data for distinct states of the Greek economy during the development of the recent crisis. Whether this matters for local and nationwide multipliers depends on qualitative differences in the numerical structure of the model. As governments have to decide how to conduct fiscal policy, our results on the Greek case provide insights to policymakers on the reach of their actions in a spatially integrated system.

Peran Belanja Pemerintah Daerah Dalam Memoderasi Pengaruh Zakat Terhadap Kemiskinan di Provinsi Aceh

This research article reviews the role of local government spending in moderating the relationship between zakat receipts and poverty in 23 districts / cities in Aceh province for the 2009-2018 period. The type of data in this study is secondary data in the form of panel data, namely a combination of time series data and cross section data. Sources of data were obtained from BPS Aceh, Baitul Mal Aceh and the Regional Government processed by the Regional Financial Data Sub-Directorate, Directorate of EPIKD from 2009-2018. The method of research analysis was carried out using panel data regression analysis and MRA to examine the effect of zakat and regional spending on poverty reduction and to examine the role of regional spending in moderating the relationship between zakat and poverty in Aceh Province. The results showed; (1) zakat has a negative and significant effect on poverty reduction; (2) BPD has a negative and significant effect on poverty reduction; (3) MDR is negative and not significant to the relationship between zakat and poverty, which means that BPD is only an independent variable but not a moderating variable on the relationship between zakat and poverty

Pengaruh Desentralisasi Fiskal Terhadap Pengentasan Kemiskinan Pada Provinsi Di Indonesia

The purpose of this study was to determine the effect of regional original income, general allocation funds, special allocation funds, profit sharing funds, and local government spending on poverty alleviation in provinces in Indonesia. The research method uses quantitative methods. The research data source is secondary data in the form of panel data, namely provincial data in Indonesia for the period 2017-2021 obtained from the Indonesian Central Bureau of Statistics. Analysis of research data using panel data regression analysis. The results of the partial hypothesis test with the t test, it is known that the variables of local revenue, profit sharing and local government spending have a partially significant effect on poverty alleviation. Meanwhile, the general allocation fund and special allocation fund do not have a partial significant effect on poverty alleviation. The results of the F test show that regional original income, general allocation funds and special allocation funds, profit-sharing funds and local government spending have a significant simultaneous effect on poverty alleviation in provinces in Indonesia in 2017-2021.

Measurement Efficiency of Local Government Spending on Poverty Alleviation in Sumatra: Output Oriented Approach With Data Envelopment Analysis

This research aims to measure efficiency of local government spending in poverty alleviation during the COVID-19 pandemic in Sumatra, Indonesia. Data Envelopment Analysis (DEA) was applied as a measurement efficiency method with output-oriented based on variable returns to scale approach.The type of data used in this study is secondary data and implements explanatory analysis. The object of our observation in this study involves total local governments in Sumatra (154 regencies/cities). It used government education spending per capita, health spending per capita, economic spending per capita, and social security spending per capita as input. The Output that we used is the poverty rate. The results show that poverty alleviation through government spending efficiency policy only can achieve by eight local governments, i.e.Deli Serdang, Simalungun, Medan, Sawah Lunto, Pekan Baru, Lampung Tengah, Bangka Barat, and Batam. Pekan Baru is the relatively most efficient regency, while Meranti has the lowest efficiency. 146 inefficient local governments should benchmark to their peer to improve their efficiency score. In addition, differences in the level of efficiency between local governments within one province also need to be inspected.