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The Allocation of Public Expenditure between the Countries of the United Kingdom: An Application of the Error Correction Mechanism

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  • Borooah, V K
  • Smyth, M F

Abstract

The principle of parity of public services within the United Kingdom implies a long-run proportionality of expenditures in England, Scotland, Wales, and Northern Ireland with short-run dynamic adjustments to reflect catch-up, policy changes and other influences. This paper presents and estimates a model of public expenditure allocation over seven categories of spending using an error correction representation. The ECM approach enables the long-run relationship between public expenditure in England and the other countries to be deduced. The results are compared with the 1979 Needs Assessment study. The conclusion is that, in general, Scotland, Wales, and Northern Ireland are underfunded, except for some evidence of catch up between 1974-79. Copyright 1993 by Scottish Economic Society.

Suggested Citation

  • Borooah, V K & Smyth, M F, 1993. "The Allocation of Public Expenditure between the Countries of the United Kingdom: An Application of the Error Correction Mechanism," Scottish Journal of Political Economy, Scottish Economic Society, vol. 40(3), pages 295-310, August.
    • Handle: RePEc:bla:scotjp:v:40:y:1993:i:3:p:295-310
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    Cited by:

    1. James Alm & Jorge Martinez-Vazquez, 2002. "On the Use of Budgetary Norms as a Tool for Fiscal Management," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper0215, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.

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