IDEAS home Printed from https://ideas.repec.org/a/sae/pubfin/v30y2002i4p273-295.html
   My bibliography  Save this article

Decentralized Budgeting Procedures for Public Expenditure

Author

Listed:
  • Rosella Levaggi

    (University of Brescia, Italy)

Abstract

This article discusses the allocation of public expenditure among competing services. Some countries such as Italy use a double budget constraint; that is, the top level sets total expenditure and its allocation between competing services, whereas other countries just define the total budget. The article examines different ways in which the relationship between the agencies involved is structured and shows that the choice among competing systems depends on the objectives pursued by the agents involved and on the information structure. The analysis shows that tighter budget rules such as those implied by a double budget constraint might be optimal; that is, autonomy in decentralization is not always the best alternative. A second interesting conclusion is that a functional decentralization might enable Central Government to extract the information rent its agents command, but in this case the incentive structure must avoid collusion among the actors involved.

Suggested Citation

  • Rosella Levaggi, 2002. "Decentralized Budgeting Procedures for Public Expenditure," Public Finance Review, , vol. 30(4), pages 273-295, July.
  • Handle: RePEc:sae:pubfin:v:30:y:2002:i:4:p:273-295
    DOI: 10.1177/109421030004002
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/109421030004002
    Download Restriction: no

    File URL: https://libkey.io/10.1177/109421030004002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Grossman, Herschel I., 1969. "Theories of markets without recontracting," Journal of Economic Theory, Elsevier, vol. 1(4), pages 476-479, December.
    2. Harris Milton & Townsend, Robert M, 1981. "Resource Allocation under Asymmetric Information," Econometrica, Econometric Society, vol. 49(1), pages 33-64, January.
    3. Levaggi, Rosella & Smith, Peter, 1994. "On the Intergovernmental Fiscal Game," Public Finance = Finances publiques, , vol. 49(1), pages 72-86.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Özgür Kıbrıs & İpek Tapkı, 2014. "A mechanism design approach to allocating central government funds among regional development agencies," Review of Economic Design, Springer;Society for Economic Design, vol. 18(3), pages 163-189, September.
    2. Rosella Levaggi, 2008. "Decentralisation vs fiscal federalism in the presence of impure public goods," Working Papers 0812, University of Brescia, Department of Economics.
    3. Carmen Marchiori & Susan Sayre & Leo Simon, 2012. "Bargaining and Devolution in the Upper Guadiana Basin," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 51(3), pages 453-470, March.
    4. T. V. Sumskaya, 2024. "Analysis of Federal Transfer Policy in Russia," Studies on Russian Economic Development, Springer, vol. 35(5), pages 733-744, October.
    5. Prakash Chandra Jha, 2015. "Theory of fiscal federalism: an analysis," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 17(2), pages 241-259, October.
    6. Wallace Oates, 2005. "Toward A Second-Generation Theory of Fiscal Federalism," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 12(4), pages 349-373, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Andrea Attar & Thomas Mariotti & François Salanié, 2020. "The Social Costs of Side Trading," The Economic Journal, Royal Economic Society, vol. 130(630), pages 1608-1622.
    2. Daron Acemoglu & Michael Golosov & Aleh Tsyvinski, 2006. "Markets Versus Governments: Political Economy of Mechanisms," Levine's Bibliography 321307000000000032, UCLA Department of Economics.
    3. Russell Cooper, 1984. "Insurance, Flexibility and Non-contingent Trades," Cowles Foundation Discussion Papers 691, Cowles Foundation for Research in Economics, Yale University.
    4. Saglam, Ismail, 2014. "Research and Development of an Optimally Regulated Monopolist with Unknown Costs," MPRA Paper 60245, University Library of Munich, Germany.
    5. Wu, JunJie & Babcock, Bruce A., 1995. "Optimal Design Of A Voluntary Green Payment Program Under Asymmetric Information," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 20(2), pages 1-12, December.
    6. Wagner, Alexander F. & Miller, Nolan H. & Zeckhauser, Richard J., 2006. "Screening budgets," Journal of Economic Behavior & Organization, Elsevier, vol. 61(3), pages 351-374, November.
    7. Joseph E. Stiglitz & Bruce Greenwald, 1992. "Towards a Reformulation of Monetary Theory: Competitive Banking," NBER Working Papers 4117, National Bureau of Economic Research, Inc.
    8. John Haltiwanger & Michael Waldman, 1983. "Interpreting Real World Contracts: An Investigation of Ex Post Mutually Beneficial Agreements," UCLA Economics Working Papers 290, UCLA Department of Economics.
    9. Salvador Barberà & Dolors Berga & Bernardo Moreno, 2020. "Arrow on domain conditions: a fruitful road to travel," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 54(2), pages 237-258, March.
    10. Martimort David & Stole Lars, 2003. "Contractual Externalities and Common Agency Equilibria," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 3(1), pages 1-40, July.
    11. Claude d'Aspremont & Jacques Crémer & Louis-André Gérard-Varet, 2003. "Correlation, independence, and Bayesian incentives," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 21(2), pages 281-310, October.
    12. Jenny Simon, 2011. "Financial Markets as a Commitment Device for the Government," 2011 Meeting Papers 447, Society for Economic Dynamics.
    13. Ismail Saglam, 2016. "On the Pareto Efficiency of a Socially Optimal Mechanism for Monopoly Regulation," IPEK Working Papers 1601, Ipek University, Department of Economics, revised May 2016.
    14. Guy Gilbert & Yvon Rocaboy, 2004. "The central government grant allocation problem in the presence of misrepresentation and cheating," Economics of Governance, Springer, vol. 5(2), pages 137-147, July.
    15. , & ,, 2012. "Mechanism design and communication networks," Theoretical Economics, Econometric Society, vol. 7(3), September.
    16. Boyd, John H. & Prescott, Edward C., 1986. "Financial intermediary-coalitions," Journal of Economic Theory, Elsevier, vol. 38(2), pages 211-232, April.
    17. Cortade, Thomas & Poudou, Jean-Christophe, 2022. "Peer-to-peer energy platforms: Incentives for prosuming," Energy Economics, Elsevier, vol. 109(C).
    18. Leonard J. Mirman & Thomas D. Jeitschko & Egas Salgueiro, 2002. "The simple analytics of information and experimentation in dynamic agency," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 19(3), pages 549-570.
    19. Julio González-Díaz & Miguel Meléndez-Jiménez, 2014. "On the notion of perfect Bayesian equilibrium," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 22(1), pages 128-143, April.
    20. Riordan, Michael H & Staiger, Robert W, 1993. "Sectoral Shocks and Structural Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(3), pages 611-629, August.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:pubfin:v:30:y:2002:i:4:p:273-295. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.