The OECD Best Practices for Effective Public Expenditure Control and Their Applicability to the German Länder: The Case of Schleswig-Holstein

16 Pages Posted: 12 May 2012 Last revised: 14 May 2012

See all articles by Jan Seifert

Jan Seifert

German Institute of Global and Area Studies (GIGA); National University of Singapore (NUS) - Lee Kuan Yew School of Public Policy

Date Written: March 12, 2012

Abstract

While German public finances have remained more resilient than other EU countries throughout the recent crisis, fiscal flexibility has become increasingly limited for its regional governments which deliver most public service. The recent introduction of a balanced-budget requirement (‘debt brake’) for state governments by 2020 will provide additional fiscal stress on underfunded public services like infrastructure, research and education as well as local finances. This article discusses how seven trends in expenditure management (Blöndal 2003) - namely medium-term budget frameworks, prudent economic assumptions, top-down budgeting, central input control relaxation, performance budgeting, transparency and modern management practices - can be of help to improve state-level finances in Germany. The state of Schleswig-Holstein is used as a case study to illustrate the challenges faced by German states.

Keywords: Germany, fiscal decentralisation, fiscal federalism, balanced budget rule, fiscal rules, Schleswig-Holstein

JEL Classification: H72, H77, Z18

Suggested Citation

Seifert, Jan, The OECD Best Practices for Effective Public Expenditure Control and Their Applicability to the German Länder: The Case of Schleswig-Holstein (March 12, 2012). Lee Kuan Yew School of Public Policy Research Paper No. LKYSPP 12-08. Available at SSRN: https://ssrn.com/abstract=2055115 or http://dx.doi.org/10.2139/ssrn.2055115

Jan Seifert (Contact Author)

German Institute of Global and Area Studies (GIGA) ( email )

Neuer Jungfernstieg 21
Hamburg, DE 20354

HOME PAGE: http://www.giga-hamburg.de/en/team/seifert

National University of Singapore (NUS) - Lee Kuan Yew School of Public Policy ( email )

Singapore 117591
Singapore

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