TY - JOUR
T1 - Intergovernmental transfers in indonesia
T2 - The risk sharing effect of dana alokasi umum
AU - Takahata, Junichiro
AU - Dartanto, Teguh
AU - Khoirunurrofik, Khoirunurrofik
N1 - Funding Information:
PAD (R1) consists of four revenue sources, namely: local tax (R1a); local retribution or levy (R1b); revenue from the segregated local assets management (R1c); and miscellaneous legal own revenue (R1d). Indirect expenditure consists of eight types of spending: indirect expenditure to employees (E1a); interest payment (E1b); subsidy payment (E1c); grant payment (E1d); social assistance payment (E1e); revenue sharing expenditure to provincial/regency/city and village governments (E1f); financial support expenditure to provincial/regency/city and village governments (E1g); and unexpected expenditure (E1h). Direct expenditure consists of three terms: direct expenditure to employees (E2a); expenditure for goods and services (E2b); and expenditure for capital goods (E2c).
Funding Information:
The first author would like to thank Dokkyo University for providing a sabbatical and the Department of Economics, University of Indonesia for hosting the leave during April 2018 to March 2019. The second author gratefully acknowledges the partial financial support from PITTA 2019 (University of Indonesia) to conduct this research. The authors also thank the weekly department seminar participants at the graduate programme of the Economic Planning and Development Policy (MPKP), Department of Economics, Faculty of Economics and Business, University of Indonesia, for their valuable comments.
Publisher Copyright:
©2021 ISEAS.
PY - 2021/4
Y1 - 2021/4
N2 - Given that most local governments in Indonesia depend heavily on intergovernmental transfers, this study tries to examine whether Dana Alokasi Umum (DAU, or general allocation fund) is able to absorb a revenue shock from the fluctuation of Pendapatan Asli Daerah (PAD, or local government revenue). The results suggest that DAU does, in fact, absorb around 83 per cent of the revenue shock. This share is greater than the compensation rate determined by the allocation formula employed in the Indonesian intergovernmental transfers system set annually by the Directorate General of Fiscal Balance, Ministry of Finance. Once the differences among local government levels are considered, it is found that DAU covers PAD decrease across all levels of local government throughout the country, but the extent of coverage depends on a number of criteria.
AB - Given that most local governments in Indonesia depend heavily on intergovernmental transfers, this study tries to examine whether Dana Alokasi Umum (DAU, or general allocation fund) is able to absorb a revenue shock from the fluctuation of Pendapatan Asli Daerah (PAD, or local government revenue). The results suggest that DAU does, in fact, absorb around 83 per cent of the revenue shock. This share is greater than the compensation rate determined by the allocation formula employed in the Indonesian intergovernmental transfers system set annually by the Directorate General of Fiscal Balance, Ministry of Finance. Once the differences among local government levels are considered, it is found that DAU covers PAD decrease across all levels of local government throughout the country, but the extent of coverage depends on a number of criteria.
KW - Dana Alokasi Umum
KW - General Allocation Fund
KW - Indonesia
KW - Intergovernmental transfers
KW - Pendapatan Asli Daerah
UR - http://www.scopus.com/inward/record.url?scp=85111284040&partnerID=8YFLogxK
U2 - 10.1355/ae38-1d
DO - 10.1355/ae38-1d
M3 - Article
AN - SCOPUS:85111284040
SN - 2339-5095
VL - 38
SP - 81
EP - 99
JO - Journal of Southeast Asian Economies
JF - Journal of Southeast Asian Economies
IS - 1
ER -