Budgetary deficits and macro budgetary components- examining ‘Law of Contiguity’ through spatial analysis of Indian states
Spatial economics deals with the mutual socioeconomic influence of the geographical boundary of an administrative body on the neighboring entities- municipalities, districts, states, and countries. Researchers have conducted spatial analyses to solve a variety of economic problems like labor dynamic...
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| Format: | Article |
| Language: | English |
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Taylor & Francis Group
2025-12-01
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| Series: | Development Studies Research |
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| Online Access: | https://www.tandfonline.com/doi/10.1080/21665095.2025.2451032 |
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| author | Avik Ghosh |
| author_facet | Avik Ghosh |
| author_sort | Avik Ghosh |
| collection | DOAJ |
| description | Spatial economics deals with the mutual socioeconomic influence of the geographical boundary of an administrative body on the neighboring entities- municipalities, districts, states, and countries. Researchers have conducted spatial analyses to solve a variety of economic problems like labor dynamics, wage equilibrium, capital formation, and demographic agglomeration/dispersion, among others. However, the application of spatial economics in public finance, despite being a pressing priority, has not been extensively explored. With India being the largest democracy in the world and having a decentralized state budget mechanism in place, focused attention is required to measure the contiguity effect in state finance. I find strong spatial dependence by implementing a fixed effect panel regression design followed by a spatial regression approach to assess fiscal health in Indian states over 22 years. The analysis reveals spatial dependence on both the income and expenditure sides of state budgetary fiscal and primary deficits. I also analyze the dynamics of the capital budget revenue and its idiosyncrasies in determining the spatial roles that govern state deficits. The empirical results underscore that fiscal policymaking through budget preparation for an Indian state must account for major fiscal components of bordering states to achieve targeted fiscal objectives. |
| format | Article |
| id | doaj-art-fd09b33e75c947ae97ba6431a63dc8a3 |
| institution | Kabale University |
| issn | 2166-5095 |
| language | English |
| publishDate | 2025-12-01 |
| publisher | Taylor & Francis Group |
| record_format | Article |
| series | Development Studies Research |
| spelling | doaj-art-fd09b33e75c947ae97ba6431a63dc8a32025-01-20T17:44:24ZengTaylor & Francis GroupDevelopment Studies Research2166-50952025-12-0112110.1080/21665095.2025.2451032Budgetary deficits and macro budgetary components- examining ‘Law of Contiguity’ through spatial analysis of Indian statesAvik Ghosh0Reserve Bank of India, Kanpur, IndiaSpatial economics deals with the mutual socioeconomic influence of the geographical boundary of an administrative body on the neighboring entities- municipalities, districts, states, and countries. Researchers have conducted spatial analyses to solve a variety of economic problems like labor dynamics, wage equilibrium, capital formation, and demographic agglomeration/dispersion, among others. However, the application of spatial economics in public finance, despite being a pressing priority, has not been extensively explored. With India being the largest democracy in the world and having a decentralized state budget mechanism in place, focused attention is required to measure the contiguity effect in state finance. I find strong spatial dependence by implementing a fixed effect panel regression design followed by a spatial regression approach to assess fiscal health in Indian states over 22 years. The analysis reveals spatial dependence on both the income and expenditure sides of state budgetary fiscal and primary deficits. I also analyze the dynamics of the capital budget revenue and its idiosyncrasies in determining the spatial roles that govern state deficits. The empirical results underscore that fiscal policymaking through budget preparation for an Indian state must account for major fiscal components of bordering states to achieve targeted fiscal objectives.https://www.tandfonline.com/doi/10.1080/21665095.2025.2451032Spatial economicsbudget deficitsfiscal healthLaw of ContiguitySpatial Durbin modelC31 |
| spellingShingle | Avik Ghosh Budgetary deficits and macro budgetary components- examining ‘Law of Contiguity’ through spatial analysis of Indian states Development Studies Research Spatial economics budget deficits fiscal health Law of Contiguity Spatial Durbin model C31 |
| title | Budgetary deficits and macro budgetary components- examining ‘Law of Contiguity’ through spatial analysis of Indian states |
| title_full | Budgetary deficits and macro budgetary components- examining ‘Law of Contiguity’ through spatial analysis of Indian states |
| title_fullStr | Budgetary deficits and macro budgetary components- examining ‘Law of Contiguity’ through spatial analysis of Indian states |
| title_full_unstemmed | Budgetary deficits and macro budgetary components- examining ‘Law of Contiguity’ through spatial analysis of Indian states |
| title_short | Budgetary deficits and macro budgetary components- examining ‘Law of Contiguity’ through spatial analysis of Indian states |
| title_sort | budgetary deficits and macro budgetary components examining law of contiguity through spatial analysis of indian states |
| topic | Spatial economics budget deficits fiscal health Law of Contiguity Spatial Durbin model C31 |
| url | https://www.tandfonline.com/doi/10.1080/21665095.2025.2451032 |
| work_keys_str_mv | AT avikghosh budgetarydeficitsandmacrobudgetarycomponentsexamininglawofcontiguitythroughspatialanalysisofindianstates |