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Budgetary Devices for Curbing Spending Prone Ministers and Bureaucrats

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  • Swank, Otto H

Abstract

In this paper I study a simple game of the budgetary process. The game has three players. A spending prone minister, who proposes a budget, a prime minister, who accepts or vetoes, and a bureaucrat who provides non-verifiable information about policy. The bureaucrat is appointed by the spending minister. I show that in this setting public spending is excessive. This result stems from the proposal power of the minister, and his incentive to appoint a spending prone bureaucrat. Next, I examine two devices for controlling public spending: binding budget targets imposed by the prime minister, and delegating veto power to a spending averse finance minister. It is shown that the latter device is more effective than the former device to curb a spending prone minister, because it not only reduces the proposal power of the spending minister, but also induces him to appoint less spending prone bureaucrats. Copyright 2002 by Kluwer Academic Publishers

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  • Swank, Otto H, 2002. "Budgetary Devices for Curbing Spending Prone Ministers and Bureaucrats," Public Choice, Springer, vol. 111(3-4), pages 237-257, June.
    • Handle: RePEc:kap:pubcho:v:111:y:2002:i:3-4:p:237-57
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    Cited by:

    1. Frederick Ploeg, 2010. "Political economy of prudent budgetary policy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 17(3), pages 295-314, June.
    2. Moessinger, Marc-Daniel, 2012. "Do personal characteristics of finance ministers affect the development of public debt?," ZEW Discussion Papers 12-068, ZEW - Leibniz Centre for European Economic Research.
    3. Chatagny, Florian, 2015. "Incentive effects of fiscal rules on the finance minister's behavior: Evidence from revenue projections in Swiss Cantons," European Journal of Political Economy, Elsevier, vol. 39(C), pages 184-200.
    4. Marc-Daniel Moessinger, 2014. "Do the personal characteristics of finance ministers affect changes in public debt?," Public Choice, Springer, vol. 161(1), pages 183-207, October.
    5. Frederick van der Ploeg, 2007. "Prudent Budgetary Policy: Political Economy of Precautionary Taxation," Economics Working Papers ECO2007/39, European University Institute.
    6. Yazaki, Yukihiro, 2018. "The effects of bureaucracy on political accountability and electoral selection," European Journal of Political Economy, Elsevier, vol. 51(C), pages 57-68.

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