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Cost-Benefit Analysis of Performance Based Budgeting Implementation

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  • Trenovski, Borce
  • Nikolov, Marjan

Abstract

This is the first study which estimates costs and benefits of overall policy reform for implementation of performance based budgeting. Costs estimation is based on a phased implementation, where we consult the Regulatory Impact Assessment methodology. In order to estimate benefits, we use a microeconomic approach to assess technical efficiency (Data Envelopment Analysis-DEA and Stochastic Frontier Analysis-SFA) of the budget users. The estimated benefits are higher than the estimated costs, or for every Macedonian denar invested in this reform an additional 2,600-8,000 Macedonian denars of gross value added in the Macedonian GDP are expected.

Suggested Citation

  • Trenovski, Borce & Nikolov, Marjan, 2015. "Cost-Benefit Analysis of Performance Based Budgeting Implementation," MPRA Paper 76350, University Library of Munich, Germany, revised 2015.
    • Handle: RePEc:pra:mprapa:76350
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    References listed on IDEAS

    as
    1. Marjan Nikolov & Borce Trenovski & Gabriela Dimovska, 2015. "Open And Transparent Budget Process In Westernbalkan Countries," Journal Articles, Center For Economic Analyses, pages 5-21, June.
    2. Allen Schick, 2007. "Performance Budgeting and Accrual Budgeting: Decision rules or Analytic Tools?," OECD Journal on Budgeting, OECD Publishing, vol. 7(2), pages 109-138.
    3. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    4. Meeusen, Wim & van den Broeck, Julien, 1977. "Efficiency Estimation from Cobb-Douglas Production Functions with Composed Error," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(2), pages 435-444, June.
    5. Allen Schick, 2003. "The Performing State: Reflection on an Idea Whose Time Has Come but Whose Implementation Has Not," OECD Journal on Budgeting, OECD Publishing, vol. 3(2), pages 71-103.
    6. Marc Robinson & Duncan P Last, 2009. "A Basic Model of Performance-Based Budgeting," IMF Technical Notes and Manuals 09/01, International Monetary Fund.
    7. W. Crain & J. O’Roark, 2004. "The impact of performance-based budgeting on state fiscal performance," Economics of Governance, Springer, vol. 5(2), pages 167-186, July.
    8. Mr. Jack Diamond, 2006. "Budget System Reform in Emerging Economies: The Challenges and the Reform Agenda," IMF Occasional Papers 2006/002, International Monetary Fund.
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    More about this item

    Keywords

    performance based budgeting; cost–benefit analysis; budget systems; public finance; technical efficiency; Macedonia.;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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