Public Finance Perspective Research Articles

Research on the Equity of Higher Education in China from the Perspective of Public Finance

Equity in higher education is an important content of social equity, as well as an extension of social equity in the field of higher education and a crucial approach to achieving social equity. Ensuring fairness in higher education is not only necessary for adhering to the scientific development concept and implementing the people-oriented governance concept, but also a momentous cornerstone for building a socialist harmonious society. This article introduces the background and significance of the issue of fairness in higher education. Through its manifestations, empirical analysis is used to analyze the basic theories of public finance. Then based on the analysis of the total amount, structure, and allocation methods of financial investment in higher education, important factors affecting equity in higher education are explored, in order to address the existing phenomenon of education inequality in China, afterwards propose policy recommendations to promote educational equity from the perspective of public finance.

Descriptive Study of Government Expenditure & Poverty Reduction in South Halmahera, Indonesia (Maqashid Sharia Approach)

AbstractGovernment intervention plays an important role in reducing poverty in South Halmahera as an antithesis to when market mechanisms fail to distribute wealth. From the Islamic public finance perspective, the ulil-amri (the government) plays a central role in managing public budget and is subject to the sharia value system. This research descriptively explores how the SH government manages its expenditure side for poverty alleviation and tries to conceptualize direct spending using the 2019 APBD(The Regional Revenue and Expenditure Budget) sample with the maqashid sharia approach. The results show that government spending brings benefits to the poor, but unfortunately an increase in spending does not always reduce poverty. During the COVID-19 pandemic, budget refocusing was quite successful in reducing poverty. Meanwhile, the expenditure allocation according to the maqashid sharia indicator has reached 69% of the total direct expenditure, although the expenditure allocation for religious protection received the smallest portion, 0.42%. Keywords:Poverty, Government Expenditure, Budget Refocusing, Maqashid Sharia

‘One System, Two Shadows’: A local public finance perspective on China's shadow banking system

Why does shadow banking persist in China despite repeated policy efforts to contain it? While studies of informal finance have traditionally emphasized the credit needs of private businesses as a demand-side explanation, this study contends that China's local public finance also constitutes an important driver for shadow banking. Based on document research and administrative data, we find that China's shadow banking system has bifurcated into two segments since the Global Financial Crisis (GFC). One is the ‘entrepreneurial shadow’ that has long provided informal credit to the private sector, especially small- and medium-sized enterprises. The other is a ‘fiscal shadow’, which serves property developers and local government financing vehicles (LGFVs), the two pillars of China's land-based local public finance regime. Property developers are major contributors to local fiscal revenues through the land economy, while LGFVs function as off-balance sheet backdoor financing intermediaries for local governments.Although localities have borrowed from unconventional sources throughout the reform era, the central government's GFC stimulus plan marked a turning point by fueling a debt-financed real estate and infrastructure construction boom. Property developers and LGFVs were launched onto a highly leveraged model of feverish expansion for over a decade. When the central government abruptly reversed its course by restricting the availability of formal credit, they became further entangled into the fiscal shadow for refinancing. Local public finance has thus become reliant on shadow banking, despite subsequent policy efforts to curb such activity. Our findings suggest the need for a more integrated analytic and regulatory framework that recognizes the mutual dependence between shadow banking and local debt – two major sources of systemic financial risks in China.

Is a Uniform Price on Carbon Desirable? A Public Finance Perspective

Is a Uniform Price on Carbon Desirable? A Public Finance Perspective

Challenges of Delivering Healthcare from an Economic and Public Finance Perspective

As populations grow older, the sustainability of current healthcare systems is being questioned. This paper considers what is necessary to ensure the sustainability of the healthcare system in Japan from the perspective of economics and public finance. In particular, it addresses the cost-effective use of limited medical resources. It also considers the problems of current regulations and regulatory regimes, which tend to protect vested interests. It may be necessary to carry out fundamental reforms of the regulatory system to deliver a sustainable healthcare system.

ANALISIS KEUANGAN PUBLIK SYARIAH TERHADAP PENGELOLAAN ANGGARAN DAN PENGELUARAN PEMERINTAH DAERAH KULON PROGO

Management of regional budget and expenditure of Kulon Progo is the authority of regional governments and must be adapted to the conditions of regional communities. Financial management of a region has been taught in Islamic law since the time of the Prophet. The concept of regional financial management based on Islamic law must apply the principles of justice. The Kulon Progo Regency government is known to be the district with the smallest financial income/revenue among other districts in Yogyakarta. With small financial revenues, the government still has to distribute regional finances fairly. Therefore, this research aims to analyze the management of regional income and expenditure budgets in Kulon Progo Regency from an Islamic Public Finance Perspective for the 2022-2023 Period. The research method used descriptive qualitative analysis. The data source is primary data obtained from interviews with the local government of Kulon Progo Regency and several community representatives. The research results show that the stages of drafting the Kulon Progo Regency APBD draft are in accordance with the Processing Stage based on the provisions of law number 12 of 2019 concerning regional financial management. The process of tax revenue and regional expenditure determination in Kulon Progo has implemented Islamic public finance principles presented by Umar Chapra.

State-Owned Enterprise’s Debt in the State Financial Regime

Several Indonesian State-Owned Enterprises (SOEs) have had very high debts recently. Several reasons, such as government assignment projects, the impact of the Covid-19 pandemic, and corrupt management behaviour, have caused the increase in liability. There is a fierce debate among academics and legal scholars regarding whether the SOE’s debt is state debt. A state company is an independent legal entity separate from the state and obtains capital from separated state assets. Besides, the state, as the majority shareholder, assigns SOEs to projects that support government programs even though they are not profitable. In addition, several SOEs often receive State Equity Participation to survive bankruptcy caused by running out of capital or large debts. This paper will analyse the country's debt status from the perspective of public finance by taking the case of Indonesia. Moreover, it will explore the theoretical and empirical aspects of SOE’s debt from a state finance point of view. This study will use doctrinal legal research to interrogate the law as it is and should be. Although this research concludes that SOEs' finances are a state financial regime, the supervision of SOEs is not Government Judgment Rules but Business Judgment Rules. SOE's debt is the responsibility of SOE as a corporate legal entity. In the case of Indonesia, the government often rescues SOEs that have failed to pay their debts through State Equity Participation and/or privatisation while maintaining most state ownership shares, for instance, Garuda Indonesia, a national airline. Finally, state accountability for SOE's debt only occurs indirectly because of the financial separation between the state and companies. The Indonesian government saved Garuda Indonesia's finances to protect national assets and continue to control vital businesses. However, the state must also reform the management of SOEs so as not to harm state finances by upholding good corporate governance and preventing fraud and corruption.

The Effects of COVID-19 on the Social Security System: A Public Finance Perspective

Currently, the country is still recovering from the COVID-19 pandemic, during which the Federal Government was forced to expand many of the programs under the Social Security Administration. During the height of the pandemic, government spending has increased to an obligation of 4.16 trillion. As the general public celebrated the booming economy of the mid and early 1920’s the economy appeared to grow at a steady rate of approximately 5%, while the unemployment rate at the time averaged around 4%. Because of this boom in the economy, many Americans moved into cities and began to invest heavily in the stock market and other nontraditional investments for the time that promised the greatest return on their investment.

Economic evaluation of a multi-strategy intervention that improves school-based physical activity policy implementation

BackgroundInternationally, government policies mandating schools to provide students with opportunities to participate in physical activity are poorly implemented. The multi-component Physically Active Children in Education (PACE) intervention effectively assists schools to implement one such policy. We evaluated the value of investment by health service providers tasked with intervention delivery, and explored where adaptations might be targeted to reduce program costs for scale-up.MethodsA prospective trial-based economic evaluation of an implementation intervention in 61 primary schools in New South Wales (NSW), Australia. Schools were randomised to the PACE intervention or a wait-list control. PACE strategies included centralised technical assistance, ongoing consultation, principal's mandated change, identifying and preparing in-school champions, educational outreach visits, and provision of educational materials and equipment. Effectiveness was measured as the mean weekly minutes of physical activity implemented by classroom teachers, recorded in a daily log book at baseline and 12-month follow-up. Delivery costs (reported in $AUD, 2018) were evaluated from a public finance perspective. Cost data were used to calculate: total intervention cost, cost per strategy and incremental cost (overall across all schools and as an average per school). Incremental cost-effectiveness ratios (ICERs) were calculated as the incremental cost of delivering PACE divided by the estimated intervention effect.ResultsPACE cost the health service provider a total of $35,692 (95% uncertainty interval [UI] $32,411, $38,331) to deliver; an average cost per school of $1151 (95%UI $1046, $1236). Training in-school champions was the largest contributor: $19,437 total; $627 ($0 to $648) average per school. Educational outreach was the second largest contributor: $4992 total; $161 ($0 to $528) average per school. The ICER was $29 (95%UI $17, $64) for every additional minute of weekly physical activity implemented per school.ConclusionPACE is a potentially cost-effective intervention for increasing schools implementation of a policy mandate. The investment required by the health service provider makes use of existing funding and infrastructure; the additional cost to assist schools to implement the policy is likely not that much. PACE strategies may be adapted to substantially improve delivery costs.Trial registrationAustralia New Zealand Clinical Trials Registry ACTRN12617001265369; Prospectively registered 1st September 2017 https://www.anzctr.org.au/Trial/Registration/TrialReview.aspx?id=373520

Is There an Industrial Land Discount in China? A Public Finance Perspective

Is There an Industrial Land Discount in China? A Public Finance Perspective

Cost Behavior in Local Governments from the Theory of Public Finance Perspective

Purpose – This research aims to analyze in an unprecedented way the behavior of costs in local government, since the current literature is incipient and there are still doubts about the application of the cost stickiness phenomenon to thepure public sector.Theoretical framework – The study approaches cost stickiness from the Theory of Public Finance perspective.Design/methodology/approach – This is an unprecedented, exploratory study with robust panel data regression statistics. We analyzed 295 local governments in southern Brazil over a 16-year period, resulting in 141,600 observations.Findings – All 32 models analyzed showed asymmetric behavior of public costs, with 75% being characterized as cost stickiness (47% sticky and 28% anti-sticky) and 25% as reverse cost (a new phenomenon identified, typical of the public sector, but which can also occur in the private sector).Practical & social implications of research – The main theoretical and practical contributions are: I) proof that the contemporary approach to cost behavior applies to the pure public sector; II) proof that budget balance, a fundamentalprecept of the TFP, does not apply in practice; and III) identification of a new phenomenon, expanding the theoretical classification of cost behavior consolidated in the contemporary accounting approach, which can help managers in planningpublic actions.Originality/value – The main contribution is the identification of a new phenomenon, called reverse cost, expanding the theoretical classification of cost behavior consolidated in the contemporary accounting approach.Keywords: Cost behavior, cost stickiness, reverse cost, cost asymmetry, government costs.

Foreign residents and local public expenditure: evidence from South Korea

With rapid globalization and the growth of immigration, countries worldwide have become multicultural societies and are experiencing social changes. Several studies have focused on the impact of foreign residents on society, particularly from a public finance perspective. The current study examines how foreign residents affect local budget expenditure in South Korea, which is currently facing a historically low fertility rate and the aging phenomenon. The employment permit system, which is a government-ordained system that allocates quotas for foreign employees by region and year, was adopted in the instrumental variable estimation to identify a causal linkage between foreign workers and local budget expenditure. We found that government spending decreases as the proportion of foreign residents among the total population increases, and this impact is particularly noticeable in social welfare spending. The results of a battery of robustness tests support these findings. Furthermore, the findings varied depending on the heterogeneities within regions and political regimes. Additionally, we found suggestive evidence that foreign workers are one of the main factors that contribute to the results, causing local governments to spend more money on non-productive areas such as administrative expenses. Overall, the results show that a sharp inflow of foreign residents may be a risk factor in terms of the quantity and quality of local budget expenditure in South Korea, suggesting that immigration policies should be operated effectively to secure the fiscal soundness and sustainability of local finance.

India’s Defence Expenditure: A Trend Analysis

This article examines India’s defence expenditure over the past ten years. In so doing, it provides a public finance perspective to explain the recurring resource crunch being faced by the Ministry of Defence (MoD). The article reasons that a substantial augmentation of resources for the MoD in the past has faced stiff barriers due to lack of tax buoyancy and also the political, economic and other exigencies that have led to greater public spending outside the traditional areas of expenses, including defence. It argues that the MoD needs to re-balance its expenditure, especially in areas pertaining to manpower.

Multilevel governance of coastal flood risk reduction: A public finance perspective

Coastal flood risk reduction (CFRR) presents a significant public funding challenge, due to its high upfront costs and long-term benefits, and this challenge will increase with future sea-level rise. The funding challenge necessarily involves multiple levels of government, due to the regional nature of CFRR public goods involved. Yet there has been little research comparing such multilevel arrangements across countries, and in particular exploring the performance of public funding arrangements for providing coastal flood risk reduction. We address this gap, applying fiscal federalism to develop a multilevel governance analysis of public decision-making and fiscal authorities for CFRR in the Netherlands, Germany, the UK and Australia. For each country, we locate key decision-making and fiscal authorities in multilevel governance arrangements, and analyse their alignment with the benefits of CFRR measures (spillovers). We find diverse coastal flood risk governance arrangements ranging from highly centralised (NL), mixed arrangements, involving regional centralisation (Germany) or partial devolvement (UK), to full decentralisation (AUS). Further, we find that in accordance with fiscal federalism, multilevel coastal flood risk governance arrangements are generally reflective of the distribution of the benefits across different levels of government, with some exceptions (Germany and UK). Finally, exploring the outlook of current arrangements under sea-level rise, we find that major fiscal redistributions may be put under pressure by rising costs likely under SLR and future coastal development. This is particularly the case for those systems which operate under hazard-based, as opposed to risk-based, coastal protection policies. Further, we find that both fully and moderately decentralised arrangements may require greater central support for alternative measures, such as retreat, in light of growing financial burdens on local governments.

Swiss Public Administration. Making the State Work Successfully. Ladner, Andreas, Soguel, Nils, Emery, Yves, Weerts, Sophie and StéphaneNahrath (eds) Cham, Palgrave Macmillan (2019), 384 p., ISBN 978‐3‐319‐92380‐2

Swiss Public Administration. Making the State Work Successfully. Ladner, Andreas, Soguel, Nils, Emery, Yves, Weerts, Sophie and StéphaneNahrath (eds) Cham, Palgrave Macmillan (2019), 384 p., ISBN 978‐3‐319‐92380‐2

Inter-Municipal Cooperation in the Czech Republic: A Public Finance Perspective

Abstract Inter-municipal cooperation (IMC) in the Czech Republic is common and flexible and is generally viewed as a means to reduce problems related to the highly fragmented local government structure. The paper utilizes financial and accounting data of public entities to evaluate the character and magnitude of inter-municipal cooperation in the Czech Republic. It concludes that the extent of public services provided based on the service contracts or through institutionalized forms of IMC is quite limited and that the majority of the IMC is somewhat informal and soft , e.g. exchange of experience and ad-hoc projects.

English

State capture is one form of corruption that has received very little research interest over the years. This could be attributed to the fact that many societies particularly in the developing world seem to have institutionalized it. State capture is a manifestation of government failure which involves the manipulation of bureaucratic rule and formal procedures by business and political elites through family ties, friendship or social groups so as to influence state policies and laws in their favor. The aim of this paper was threefold: First, to give an elaborate and detailed discussion surrounding the phenomenon of state capture from a public finance perspective; second, to discuss the extent of state capture in Zambia citing instances of state capture and how this negatively impacts on society at large; and third, to examine the effects of state capture on key socioeconomic outcomes and broader governance while making comparisons with other countries. Analysis took the form of extensive review of literature and descriptive analysis focusing on frequencies, trend analysis and simple measures of association. This paper outlines that state capture is a manifestation of government failure and is based on the principles of the predatory government view of the state in which state agents act as utility maximizers. It establishes that state capture is a combination of a weak institutional and governance structure which gives room for rent-seeking, lobbying, election rigging and class formation. Further, the study establishes that in Zambia, although the perception of state capture has reduced slightly, it  exists and has an effect on socioeconomic outcomes such as human development and the growth of firms. The paper concludes by stressing the need to put in place strong social and political institutions that will help reverse this dangerous trend.   Key words: State capture, corruption, market failure, pareto optimum, rent seeking, lobbying, class formation, logrolling. &nbsp

Indirect costs of diabetes and its impact on the public finance: the case of Poland

ABSTRACTBackground: Growing public and private expenditure on healthcare results i.a. from the spreading of chronic diseases. Diabetes belongs to the most frequent ones, beyond neoplasms and cardiological diseases, and hence generates a significant burden for the public finance in terms of the direct costs. However, the economy suffers also from the indirect cost of diabetes that manifests itself in the loss in Gross Domestic Product (GDP) and general government revenues.Methods: This paper aims to measure this indirect cost, both in terms of GDP drop (social perspective) and public revenue drop (public finance perspective), in the case of Poland in 2012–2014. We use a modified human capital approach and unique dataset provided by the Social Security institution in Poland and the Polish Central Statistical Office.Results: Diabetes is a substantial and growing burden for the Polish economy. In the years 2012, 2013 and 2014 the indirect cost (output loss) amounted to 1.85 bn USD, 1.94 bn USD and 2.00 bn USD respectively.Conclusions: Estimated indirect cost of diabetes can be a useful input for health technology analyses of drugs or economic impact assessments of public health programmes.

Measuring dependency ratios using National Transfer Accounts

It is now widely recognised that the socio-economic changes that ageing societies will bring about are poorly captured by the traditional demographic dependency ratios (DDRs), such as the old-age dependency ratio that relates the number of people aged 65+ to the working-age population. Compared to the older people of today, future older generations will be in better health, and will likely work longer. However, strictly from a public finance perspective, the extent to which the DDRs capture the challenges that stem from ageing depends on future changes in the age structure of the population, in behavioural patterns, and in age-related public transfers. Combining population projections and National Transfer Accounts (NTA) data (i.e., data on age-specific public transfers), we construct a ‘transferbased’ demographic dependency ratio for seven European countries up to 2050. We then compare the quantitative impact of the transfer-based DDR with that of the traditional DDR for three different policy responses to population ageing: net immigration, healthy ageing, and longer working lives. This is done by linking agespecific public health transfers and labour market participation rates to changes in mortality. Four main findings emerge. First, the simple old-age dependency ratio overestimates the future public finance challenges faced by the countries studied, and substantially so for some countries, such as Austria, Finland, and Hungary. Second, healthy ageing (i.e., keeping health transfers constant for a given mortality rate) has a modest effect on public finances, except in the case of Sweden, where it plays an important role. Third, the long-run effect of immigration is captured well by the traditional DDR measure if the common assumption that immigrants are similar to natives is maintained. The immediate to short-term impact of immigration tends to be overstated by the traditional DDR measure. Finally, increasing the average length of working life is central to addressing the public finance challenge of ageing. We estimate that extending the average length of working life by three to five years over the next 25 years – roughly in line with the gain in life expectancy – will substantially reduce the impact of ageing on public transfers.

Główny Urząd Statystyczny jako źródło informacji istotnych w określeniu stanu finansów publicznych Rzeczypospolitej Polskiej. Gospodarka finansowa Głównego Urzędu Statystycznego

In the elaboration the author discussed the meaning of the public statistics in public finances, the structure and the financial activity of the Central Statistical Office (CSO) and other units of public sector, which is related with it.Besides, the author indicates example of legal solutions in the Polish order financial which underlines the importance and actualness of undertaken subject matter. Also, the author underlines the meaning of the public statistics in the process of the efficient financial management public and conducts of the transparent economy with public measures. The author constates that the catalogue of tasks of CSO, from the perspective of public finance, is extensive and dynamic.