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A New Theory Of The Budgetary Process

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  • SOUMAYA M. TOHAMY
  • HASHEM DEZHBAKHSH
  • PETER H. ARANSON

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

  • Soumaya M. Tohamy & Hashem Dezhbakhsh & Peter H. Aranson, 2006. "A New Theory Of The Budgetary Process," Economics and Politics, Wiley Blackwell, vol. 18(1), pages 47-70, March.
    • Handle: RePEc:bla:ecopol:v:18:y:2006:i:1:p:47-70
    DOI: 10.1111/j.1468-0343.2006.00162.x
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    Cited by:

    1. José Caamaño-Alegre & Santiago Lago-Peñas, 2011. "Combining Incrementalism and Exogenous Factors in Analyzing National Budgeting," Public Finance Review, , vol. 39(5), pages 712-740, September.
    2. Benoît Le Maux, 2009. "How Do Policy‐Makers Actually Solve Problems? Evidence From The French Local Public Sector," Economics and Politics, Wiley Blackwell, vol. 21(2), pages 201-231, July.

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