Line Item Budgeting and Production Efficiency
Journal of Theoretical Accounting Research, Volume 7, Issue 1, Fall 2011,pp. 108-126
31 Pages Posted: 15 Nov 2008 Last revised: 20 Feb 2018
Date Written: November 13, 2008
Line item budgeting is a widely used managerial control device in governmental and nonprofit organizations. In this study, we explicitly model the relationship between input quantities and their prices with particular focus on the line item budgeting assumption of input separability, i.e., optimal quantity for each input is determined separately and independently of other inputs. Our empirical results support input separability and reject input substitutability.
Keywords: Line item budgeting, production efficiency, governments, nonprofits, school districts, Political Economy
JEL Classification: M40, M46, M48, C44, C67, D61, G34, I22, L30,L31, L51, P16
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