This study examines the causal effect of asymmetric fiscal decentralization on education and health outcomes in Papua Province, Indonesia, from 1994 to 2016, using the Synthetic Control Method (SCM). The counterfactual series of this study is constructed by using a synthetic control unit deriving data from 21 provinces in Indonesia. It is found that the asymmetric fiscal decentralization which started with the enactment of Law No 21 as of 2001 on Special Autonomy for the Papua Province has negative effects on education and health outcomes in Papua. It is also observed that the outcome gap between the treatment unit and the synthetic control unit also grows over time. Thus, this paper concludes that asymmetric fiscal decentralization is ineffective as evidenced by education and health outcomes in Papua. This paper makes a valuable contribution to the empirical literature on the macroeconomic effects of asymmetric fiscal decentralization. While fiscal decentralization has positive impacts on education and health outcomes in most literature, this paper shows adverse results for the case of Papua Province.

This study investigates the formation of the interaction between monetary and fiscal policies in Indonesia during periods of economic turmoil in the US (external shock) based on the Hybrid New Keynesian (HNK) model. The study estimates the HNK model using the Full Information Maximum Likelihood and time-series data over theperiod 2001Q1-2014Q4. The result reveals the form of coordination is a monetary-led policy mix between active monetary policy and passive fiscal policy. The degree of coordination is down when external shock increases.

Purpose Rural–urban migration has led to an increase in the community’s need for housing in the migration area. The demand for housing is getting higher while the land availability does not increase so that house prices will continue to increase. This study aims to estimate the impact of immigration on urban housing prices in Indonesia. Design/methodology/approach This study examines the effect of immigration on urban housing prices at the city level in Indonesia by using 14 major cities data from 2012 to 2020 to build a panel data model. The model also incorporates urban economic conditions as control variables. Findings From the national level, the authors find that inter-regional migration has a significant and positive impact on urban housing prices. Based on the results, this paper suggested addressing the volatility of house prices through the provision of decent and affordable housing improvement to meet the growing needs and demands of the immigrant population. Research limitations/implications This study still has several limitations: the sample of cities used is not comprehensive enough, and the time period used is not long enough; the spatial impact on house prices is not taken into account, and the effect of migrant characteristics in each city has not been considered. Originality/value There is limited research on the impact of immigration on urban housing prices in city levels, especially in the case of Indonesia. In addition, recent migration is used to proxy the immigration pattern. This paper provides a valuable contribution to the empirical literature on the effect of immigration at the city level in developing countries.

ABSTRACT

Fiscal sustainability is a concern in many economies, especially with increasing government debt in many countries, including Indonesia. This study aims to analyze fiscal sustainability in Indonesia for the 1970-2018 period. There are two methods to measure fiscal sustainability: testing the stationarity of government debt using government budget constraints and estimating fiscal sustainability using the fiscal reaction function. Error Correction Model is used to estimate the fiscal reaction function. The fiscal sustainability test with the debt stationarity test and the fiscal reaction function had consistent results, indicating fiscal sustainability in Indonesia. The government responded well to the increase in debt by increasing the primary surplus. This study proves that the relationship between debt and primary balance is not linear or quadratic. It shows that initially, the government responds to an increase in debt by increasing its primary surplus. However, at a certain threshold, the government’s ability to respond will weaken, so the government needs to pay attention and maintain the size of the government debt ratio towards Gross Domestic Product with fiscal discipline and fiscal reform through strict regulations and prudent debt management. However, strict debt regulations can limit economic growth. Therefore, an accurate threshold calculation is needed to determine the maximum debt to encourage optimal economic growth.