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The political economy of the Malaysian subnational governments' fiscal behavior

Abdul Jalil, Ahmad Zafarullah (2009) The political economy of the Malaysian subnational governments' fiscal behavior. International Journal of Management Studies (IJMS), 16 (1). pp. 261-283. ISSN 0127-8983

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This article attempts to shed light on the political economy of the Malaysian state governments’ budgetary behaviour by tailoring hypotheses drawn from recent theoretical literature to the Malaysian institutional context and testing them empirically. The main objective here was to examine whether state governments’ fiscal behaviour can partly be explained by the political attributes and the institutional characteristics of the government, and of the legislature. In particular, the study analysed whether the incentives for the state governments to observe a prudent spending behaviour have not been undermined by the fact that they have been able to influence relevant central government decisions regarding their finance. The estimation results showed that states that are over-represented at the executive level tend to have higher spending and deficits. However, no correlation was found between over-representation at the parliament and state governments’ fiscal outcomes. This can be explained by the fact that in Malaysia, as is frequently the case in developing nations, the legislature is peripheral to the executive in terms of decision-making power.

Item Type: Article
Uncontrolled Keywords: state governments, fiscal behaviour, political economy
Subjects: H Social Sciences > HJ Public Finance
Divisions: College of Arts and Sciences
Depositing User: Mrs. Norazmilah Yaakub
Date Deposited: 08 Jul 2010 01:17
Last Modified: 08 Jul 2010 01:17

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