Administrative Delegation of Budgetary Powers and Fiscal Performance

23 Pages Posted: 7 Oct 2020

See all articles by Rune Sørensen

Rune Sørensen

BI Norwegian Business School

Benny Geys

BI Norwegian Business School; Vrije Universiteit Brussel (VUB) - Applied Economics Department

Date Written: November 1, 2020

Abstract

Does delegation of the budget preparation process to top civil servants improve or worsen fiscal performance? We address this question by analyzing high‐quality data on budgetary procedures and fiscal performance over a 25‐year period in Norwegian local governments. This long time period allows exploiting substantial variation in budgetary procedures across time and space. The results show that administrative delegation decreases fiscal deficits as a share of current revenues. Compared to procedures relying on political coordination or the traditional ‘bottom‐up’ procedure, deficits are approximately 0.3 percentage points lower on average under administrative delegation. Still, this effect is conditional upon the presence of minority governments and fails to materialize when the mayor enjoys majority support in the local council. Our results thus indicate that administrative delegation in budgetary processes may constitute an important tool to alleviate poor fiscal performance arising due to political coordination failures and weak political decision‐making.

Suggested Citation

Sørensen, Rune and Geys, Benny, Administrative Delegation of Budgetary Powers and Fiscal Performance (November 1, 2020). Kyklos, Vol. 73, Issue 4, pp. 477-499, 2020, Available at SSRN: https://ssrn.com/abstract=3705438 or http://dx.doi.org/10.1111/kykl.12248

Rune Sørensen

BI Norwegian Business School

Benny Geys (Contact Author)

BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
Norway

Vrije Universiteit Brussel (VUB) - Applied Economics Department ( email )

Pleinlaan 2
1040 Etterbeek
Brussel, CA 1040
Belgium

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