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Endogenous public sector budgeting: to centralize or not?

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  • Gervan Fearon

Abstract

In this paper the impact of budget size on a government's choice to centralize or decentralize the budgetary process is investigated using asymmetric information, differing preferences, and endogenous budgetary arrangements. The central government chooses between a budgetary process that excludes the regional board (centralization) and one that includes the board (decentralization) in the determination of program budget levels. It is predicted that the central government will decentralize the budgetary process at low and centralize at high overall budget levels. Switching from decentralization to centralization is predicted to result in a reduction in the budget allocated to the regional board.

Suggested Citation

  • Gervan Fearon, 2001. "Endogenous public sector budgeting: to centralize or not?," Canadian Journal of Economics, Canadian Economics Association, vol. 34(2), pages 504-524, May.
    • Handle: RePEc:cje:issued:v:34:y:2001:i:2:p:504-524
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    Cited by:

    1. Molero, Juan Carlos, 2002. "Gasto Público y Federalismo Fiscal en España. Período 1984-1998 [Public Spending and Fiscal Federalism in Spain. Period 1984-1998]," MPRA Paper 8098, University Library of Munich, Germany.
    2. Gervan Fearon, 2009. "Economics of public good provision: auditing, outsourcing, and bribery," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 42(3), pages 997-1022, August.

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    More about this item

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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