Abstract

http://ssrn.com/abstract=882975
 
 

Citations (71)



 


 



Budget Processes and Commitment to Fiscal Discipline


Jürgen Von Hagen


University of Bonn - Institute of Economic Policy; Centre for Economic Policy Research (CEPR)

Ian Harden


affiliation not provided to SSRN

July 1996

IMF Working Paper No. 96/78

Abstract:     
This paper develops a political-economy model of the budget process focusing on the common pool problem of the public budget. We show that the externality arising from the fact that public spending tends to be targeted at individual groups in society while the tax burden is widely dispersed creates a bias towards excessive expenditures and debt. This bias can be reduced by introducing elements of centralization in the budget process, that is, institutional structures that strengthen a comprehensive view of the budget over the particularistic view of the spending ministers and the members of parliament. Using examples from EC countries, we show how budget processes lack or possess such elements. We then present empirical evidence supporting the claim that centralizing elements reduce the deficit bias. The last section concludes with models for reform of the budget process.

Number of Pages in PDF File: 42

JEL Classification: D71, D73, H61, H62, H72

working papers series


Download This Paper

Date posted: February 15, 2006  

Suggested Citation

von Hagen, Jürgen and Harden, Ian, Budget Processes and Commitment to Fiscal Discipline (July 1996). IMF Working Paper, Vol. , pp. 1-42, 1996. Available at SSRN: http://ssrn.com/abstract=882975

Contact Information

Jürgen Von Hagen (Contact Author)
University of Bonn - Institute of Economic Policy ( email )
Adenauerallee 24
D-53113 Bonn
Germany
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Ian Harden
affiliation not provided to SSRN
No Address Available
Feedback to SSRN


Paper statistics
Abstract Views: 1,431
Downloads: 528
Download Rank: 27,913
Citations:  71

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo5 in 0.375 seconds