Fiscal Policy Changes by the Difference of Attributes of Governors

Abstract

The purpose of this study is to clarify the fiscal policy changes brought about by the differences of attributes of governors. Especially, the analysis focused on changes in local governments’ expenditure around 2000 by using panel data of prefectures from 1991 to 2015. The analysis results show that public investment was reduced more under governors who have the attributes of Ministry of Internal Affairs and Communications (MIC) and other ministries than other governors. The results also show that public investment was cut more under governors who had the MIC and other ministries, and fiscal discipline was brought about. This result suggests that governors with a central bureaucratic background has brought fiscal discipline to their regions in response to changes in national fiscal policy.