A New Theory of the Budgetary Process

24 Pages Posted: 8 May 2006

See all articles by Soumaya M. Tohamy

Soumaya M. Tohamy

Government of the State of Maryland

Hashem Dezhbakhsh

Emory University - Department of Economics

Peter H. Aranson

affiliation not provided to SSRN (deceased)

Abstract

This paper offers an alternative to the view that budgetary decisions are incremental because they are complex, extensive, and conflicted. Our model interprets incrementalism as the result of a legislative political strategy in response to interest group politics and economic conditions. Accordingly, a legislator chooses between single-period budgeting or multiperiod budgeting, where single-period budgeting is associated with a greater chance of non-incremental budgeting outcomes. We use a statistical procedure developed by Dezhbakhsh et al. (2003) for identifying non-incremental outcomes to test the implications of the model. Results support the model's predictions: a higher discount rate and a persistently large deficit appear to cause departures from incremental budgeting; Democrats' control over the political process have a similar effect, while a higher inflation rate has an opposite effect.

Suggested Citation

Tohamy, Soumaya M. and Dezhbakhsh, Hashem and Aranson, Peter H., A New Theory of the Budgetary Process. Economics & Politics, Vol. 18, No. 1, pp. 47-70, March 2006, Available at SSRN: https://ssrn.com/abstract=886596 or http://dx.doi.org/10.1111/j.1468-0343.2006.00162.x

Soumaya M. Tohamy (Contact Author)

Government of the State of Maryland ( email )

U.S. Consumer Product Safety Commission
4330 East West Highway
Bethesda, MD 20814
United States

Hashem Dezhbakhsh

Emory University - Department of Economics ( email )

1602 Fishburne Drive
Atlanta, GA 30322
United States
404-727-4679 (Phone)
404-727-4639 (Fax)

Peter H. Aranson

affiliation not provided to SSRN (deceased)

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