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Abstract Starting in 2001 the Government of Indonesia employed the Regional Autonomy Law, providing larger fiscal role to the province and district governments. However, our understanding of its impacts on development in Indonesia is still limited. This paper seeks to find the relationship between increasing local governments’ capital expenditure and industrial development with focus in the non-oil and gas sector. Capital spending is thought to have moderation effect on investment, the main channel for industrialization, that should contribute to industrial growth. Our System GMM results suggest that there are positive and significant correlations between capital spending and industrial growth, presenting evidence of local governments’ role. However, we fail to find significant moderation effect between local capital spending and industrial investment towards the sector’s growth. This poses problem for industrialization at the local level. Decentralization progress in Indonesia has been institutionally anchored by the central government, particularly with the introduction of concurrent affairs in 2004 that allowed Jakarta to take a major developmental role in districts and provinces at the cost of lesser local governments’ role. Our study proposes a new institutional model that promote better central–local collaboration.

Starting in 2001 the Government of Indonesia employed the Regional Autonomy Law, providing larger fiscal role to the province and district governments. However, our understanding of its impacts on development in Indonesia is still limited. This paper seeks to find the relationship between increasing local governments' capital expenditure and industrial development with focus in the non-oil and gas sector. Capital spending is thought to have moderation effect on investment, the main channel for industrialization, that should contribute to industrial growth. Our System GMM results suggest that there are positive and significant correlations between capital spending and industrial growth, presenting evidence of local governments' role. However, we fail to find significant moderation effect between local capital spending and industrial investment towards the sector's growth. This poses problem for industrialization at the local level. Decentralization progress in Indonesia has been institutionally anchored by the central government, particularly with the introduction of concurrent affairs in 2004 that allowed Jakarta to take a major developmental role in districts and provinces at the cost of lesser local governments' role. Our study proposes a new institutional model that promote better central–local collaboration. [ABSTRACT FROM AUTHOR]

In Nigeria, fiscal expenditures continue to grow without a corresponding increase in revenue. This has worsened fiscal sustainability resulting in high rate of deficits and severe inflationary pressure. In this study, we examined the relationship between monetary inflation and fiscal spending in Nigeria using time series data from 1981 to 2016. Following ex post facto research design, we employ Least Squares (LS) technique in the estimation while line graph, normality test, correlation analysis were used in the preliminary analysis. Data for the model in which inflation was made a function of government recurrent expenditure, government capital expenditure and interest rate were collected Central Bank of Nigeria (CBN) Statistical Bulletin. The findings indicates that government capital spending (𝛽𝛽=-0.778665, t=-10.1298, p<0.05) exert a significant negative effect on monetary inflation in Nigeria, money supply (𝛽𝛽=1.556819, t=2.7021, p<0.10) exert a significant positive effect on monetary inflation in Nigeria. However, government recurrent spending (𝛽𝛽=-1.0005, t=-0.1970, p<0.10) exerts no effect on monetary inflation in Nigeria. The result suggests that inflation do not grow with the growth in fiscal spending a results which implies that government fiscal spending has not reach a level that it can stimulate inflation and that, inflation is indeed monetary phenomena in the country. Therefore, government needs to discourage all non-productive expenditures since fiscal spending has been shown to be ineffective neither in raising aggregate demand nor stimulating inflation. Also, contractionary monetary policy as well as economic diversification and import reduction policies that can bring about stable inflation rate should be revitalised. [ABSTRACT FROM AUTHOR]

This paper investigates the extent to which state and local government capital spending in the United States can be an effective vehicle for countercyclical policy. Policy responses to recent cyclical downturns have included a variety of policies to encourage greater spending at the state and local level, including efforts to lower borrowing costs for these governments, but the effectiveness of these policies remains unclear. To examine the effectiveness of state-local capital spending as a countercyclical tool, I use a unique data set consisting of open-ended interviews with state and local budget officers and a survey of state governments. I find that at present, there are significant barriers preventing countercyclical state-local capital spending. First, interventions to stimulate capital spending via easing financing conditions are likely limited by two factors: some governments use minimal amounts of borrowing to finance capital spending, and for governments that do rely primarily on borrowing, capital spending appears insensitive to interest rates. Second, state and local capital spending decisions involve substantial lags, making it a poor vehicle for countercyclical fiscal policy even in the absence of financing constraints. Third, state-local budget officials do not view capital spending as a tool for economic stabilization. [ABSTRACT FROM AUTHOR]

Within countries, individual state-run banks' lending correlates with prior money growth; similar private-sector banks' lending does not. Aggregate credit and investment growth correlate with prior money growth more where banking systems are more state-run. Size and liquidity differences between state-run and private-sector banks do not drive these results; further tests discount broad classes of alternative explanations. Tests exploiting heterogeneity in political pressure on state-run banks associated with privatizations and elections suggest a command-and-control pseudo-monetary policy channel: changes in money growth, perhaps reflecting political pressure on the central bank, change banks' lending constraints; political pressure actually changes state-run banks' lending. This paper was accepted by Tomasz Piskorski, finance. [ABSTRACT FROM AUTHOR]

This article employs Turkish firm-level data and analyses the effect of antidumping protection on capital spending and Research and Development (R&D). Using matching techniques and alternative control groups and applying difference-in-difference methodology, we find that antidumping duties imposed by the Turkish government significantly increase fixed investment and R&D expenditures. We also show that antidumping duties are effective in terms of increasing the domestic sales. To our knowledge, our article represents the first attempt to analyse the effect of antidumping policy in Turkey, a very active user of temporary trade barriers, using firm-level data. [ABSTRACT FROM AUTHOR]

This paper provides the first cross-country study of the macroeconomic effects of public investment in South-East Europe. For these countries, we construct a unique dataset of exogenous changes in public investment and use them with Jordá (2005) local projections method to estimate their dynamic effects on the main macroeconomic aggregates, the unemployment rate and debt-to-GDP ratio. Our results show significant multiplicative effects of public investment on GDP, delivered primarily through crowding in of private investment. Our analysis confirms that public investment can be seen as a catalyst of positive spillover effects to other sectors of the economy and thus contribute to productivity growth. [ABSTRACT FROM AUTHOR]

Abstract Health systems around the world face financial pressures that can affect sustainability and patient outcomes, and there is a vast literature devoted to the allocation of scarce health care resources. Capital spending - for example on estates, equipment and information technology - is an important but often neglected area of this literature. This study explores the constraints on the allocation of capital budgets in health care, before addressing the question: what is the role of priority setting and rationing in responses to these constraints? The paper presents findings from interviews conducted with senior finance professionals in 30 National Health Service local provider organisations across England. Findings suggest a pervasive sense of impending crisis, with capital restrictions limiting investment in buildings, infrastructure and equipment. The paper applies a conceptual classification scheme from the classic rationing literature (the forms of rationing framework) and identifies widespread practices of 'selection', 'dilution' and 'delay', with 'denial' and 'termination' comparatively rare. Practices of 'deflection' and 'deterrence' are ascribed to national actors as a means of restricting the flow of capital resources to the system. The study suggests that there is little by way of tailored support for priority setting in capital spending, and a perception that decisions are often reactive and short term. It also suggests that wider system features and dynamics can preclude or constrain priority setting at the organisational level. The authors use these findings to suggest future conceptual development of the forms of rationing framework and make recommendations for research and practice in this area. Highlights • Respondents described capital budget deficits affecting quality and safety of care. • Most had adopted rationing and/or priority setting to help deal with this. • Service dilution, delay and selection were the most cited forms adopted. • Lack of tools and the system context impeded local decision-making. [ABSTRACT FROM AUTHOR]

The subnational government spending in Indonesia exhibit a highly skewed distribution, i.e., it is very low in the first two-quarters and then increases significantly in the last two-quarters. Such explosive pattern poses two disadvantages. First, the regional output will fall below its optimal level as the low government capital expenditure leads to a fewer provision of public goods. Second, a significant increase in government spending in the later quarter pushes the short run aggregate demand to the northeast and creates an inflationary pressure in the following quarters. In this study, we analyze the effect of quarterly regional government expenditure growth on regional inflation during 2010–2014. Using Arellano Bond GMM estimation, we find government expenditure growth leads to higher inflation in the same quarter. A percentage increase in non-capital expenditure spending results in a higher inflation than a percentage increase in capital spending.

This article investigates the circumstances surrounding large investments by firms in the hospitality sector in the United States. The authors identify 400 large-scale investment events for firms in the restaurant, hotel, and recreation industries. During these events, firms increase their size substantially through building or acquiring assets. The authors determine that a combination of market and firm-specific factors lead to such events. Firms are more likely to engage in large investments when they have experienced strong recent sales growth and when they have lower existing leverage. These investments are more likely when the market is less volatile and when general economic conditions indicate strong consumer demand. Finally, the authors show that firms are more likely to rely on a combination of cash flow and debt financing to complete such investments, though firms experiencing higher sales growth are prone to use more equity financing. [ABSTRACT FROM AUTHOR]

This paper attempts to disentangle the poverty effects of key policy variables that directly affect the poor (namely the government-led channel of development spending and financing) in both agricultural and non-agricultural sectors after accounting for the effect of respective sectoral per capita income and prices, using data from India over five decades. The paper emphasizes the sectoral composition of income and prices as mechanisms influencing the level of poverty and establishes empirically that it is the rise in non-agricultural per capita income that reduces rural poverty via the channel of internal migration, after having controlled for the variation in key components of fiscal spending and monetary/financial policy via the availability of credit. Uneven sectoral growth pattern explains why urban poverty becomes a spill-over of persistent rural poverty when the agricultural sector shrinks. While checking for robustness, there is evidence that the rise in non-agricultural income alone may not reduce rural poverty, when measured in terms of rural infant mortality rate as a non-income indicator of well-being. [ABSTRACT FROM AUTHOR]

This article combines literature on cutback management with the results of a survey of county commissioners. Specifically, it focuses on the use of capital spending reductions in county government to cope with fiscal stress and the potential long-term impact of such reductions in response to the limited amount of research on this form of local government. In light of the literature and survey results, it recommends that county governments change their behavior and avoid cuts to their capital budgets due to the long-term costs of delayed maintenance and the opportunity costs incurred by stifling economic development. It also presents policy choices available to many counties that enable them to maintain capital investments, including public–private partnerships and earmarked local option sales taxes. The study concludes with a call for quantitative research on the long-term effects of capital reductions during economic downturns. [ABSTRACT FROM AUTHOR]

The purpose of this study is to address differences in states' capital spending between public four-year historically Black colleges and universities (HBCUs) and their predominantly White institutions (PWIs) counterparts located in the southeastern and bordering regions of the United States. This investigation was viewed through nine academic years (2002 to 2010) and in those states where the United States v. Fordice decision mandated the dismantling of 'de facto segregation' practices. When referring to matters of governance contrary to a regulation, this means in custom but not necessarily ordained by law. In the case regarding capital spending per full time equivalent (FTE) between the combined HBCUs and PWIs population, the Maim-Whitney U tests revealed several instances where there were disparities in capital spending between the two groups. Of the researched periods, PWIs overall capital spending patterns were statistically higher than HBCUs in six of the nine years. These findings agree with anecdotal accusations that alleged capital spending ambiguities still exist after the Fordice decision. [ABSTRACT FROM AUTHOR]

Data are employed from a sample of New York hospitals and the Hospital Consumer Assessment Healthcare Providers and Systems database to analyze the effects of capital spending, staffing levels, and salaries on hospital performance. The most striking result is that higher average salaries are associated with lower length of stay, lower mortality rate, and higher satisfaction but are not significantly related to cost per patient. Therefore, it appears that human resource investments may be associated with better patient outcomes without significantly increasing the cost of patient care. [ABSTRACT FROM AUTHOR]

Sub-national government capital spending is important for both public service delivery and economic development. Currently, Indonesian sub-national public capital spending appears barely sufficient to cover the annual depreciation of its fixed assets. A substantial proportion of local government investment spending goes to create relatively unproductive assets, such as administrative office buildings. Sub-national governments finance their capital acquisitions out of gross operating budgets and have thus far not used, to any great extent, either borrowed funds or their significant cash reserves for such purposes. Indonesian sub-nationals need to spend more on capital than they do now and also need to focus that spending on more useful types of infrastructure. The major constraints to increasing capital spending at the sub-national level are not related to a dearth of finance, but regulatory rigidities in budget preparation and implementation and, most importantly, a lack of capacity to plan, design and implement investment projects. Copyright © 2010 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

This article examines whether the use of impact fees and special assessments affect the level of capital spending and two major own source revenues of local capital spending (taxes and long-term debt) by analyzing a panel of 695 American cities with populations over 20,000 during the time period of 1980-2000. Since impact fees and special assessments are heavily used in a growing community and because it covers less than half the costs of new development, the findings demonstrate that the private financing of public infrastructure (impact fees and special assessments) increases the level of local capital spending. It also leads to an increase in the level of long-term debt use. Although it provides partial tax relief, it is not a strong substitute for taxes. Thus, impact fees and special assessments are not a substitute for local capital spending. It is rather a supplemental revenue source to fund local capital infrastructure. [ABSTRACT FROM AUTHOR]