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Aggregate expenditure ceilings and allocative flexibility

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  • Marc Robinson

Abstract

This article shows how to combine top-down budgeting – in the core sense of the establishment of a hard aggregate expenditure ceiling at the start of the budget preparation process – with flexibility in the allocation of the aggregate ceiling between spending ministries during budget preparation. It argues strongly against determining spending ministry shares of the aggregate expenditure ceiling without any prior opportunity for them to present formal new spending proposals. The keys to reconciling top-down budgeting with allocative flexibility are: the baseline/new policy distinction; good forward estimates; a government-wide new policy pool; and spending review. JEL classification: E620, H610 Keywords: Fiscal policy, budget preparation process, top-down budgeting, expenditure ceiling, bottom-up spending requests, fiscal space, multi-year ceilings, baseline ceilings, allocative efficiency, aggregate fiscal discipline, budgeting techniques

Suggested Citation

  • Marc Robinson, 2013. "Aggregate expenditure ceilings and allocative flexibility," OECD Journal on Budgeting, OECD Publishing, vol. 12(3), pages 1-19.
    • Handle: RePEc:oec:govkaa:5k468nqj1f7g
    DOI: 10.1787/budget-12-5k468nqj1f7g
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    Cited by:

    1. Ringa Raudla & James W. Douglas & Muiris MacCarthaigh, 2022. "Medium‐term expenditure frameworks: Credible instrument or mirage?," Public Budgeting & Finance, Wiley Blackwell, vol. 42(3), pages 71-92, September.

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