Policy Instruments and Public Spending for Local Governments: Empirical Studies of Taiwanese Municipalities

• Main Authors: Ya-Hui Chen, 陳雅惠
• Other Authors: Pei-Ling Shan
• Format: Others
• Language: zh-TW
• Published: 2014
• Online Access: http://ndltd.ncl.edu.tw/handle/49z84w

碩士 === 淡江大學 === 會計學系碩士班 === 102 === The amount of public spending of local governments, tend to have a close relationship with the source of budget revenues, debt balance, total output and partisan political factors of local governments. This study focuses on the panel data of 20 local governments in Taiwan, from 2000 to 2012, testing the different revenue sources’ impact of public spending. The empirical results find that taxes as local governments'' revenue resources, it easily leads to the expansion of public spending and exists a "fiscal illusion" phenomenon. Central grants as financial resources, it leads to excessive expenditure and flypaper effect. Local governments often raise funds by bond financing, but if not control well, it will result in debt on debt, and the deterioration of financial situation gets more serious. It also reflects that the increase of Taiwan''s local governments'' spending is indeed followed by the year of local elections, existing a political business cycle phenomenon. To let the local governments’ public expenditure decision-making be more reasonable and sound, this paper based on empirical results and provides some appropriate policy recommendations for future expenditure, including local governments should follow the norm of fiscal discipline to prevent fiscal illusion; local government should provide grants plans to the central government, and the central government should keep track of the use of grants to avoid flypaper effect; the central and local governments should establish laws of bribe prevention to avoid the bribe phenomenon.