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Budget Processes: Theory and Experimental Evidence

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Author Info
Karl-Martin Ehrhart (University of Karlsruhe)
Roy Gardner (Indiana University and ZEI, University of Bonn)
Jürgen von Hagen (University of Bonn, Indiana University, and CEPR)
Claudia Keser (IBM T.J. Watson Research Center and CIRANO, Montreal)

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Abstract

This paper studies budget processes, both theoretically and experimentally. We compare the outcomes of bottom-up and top-down budget processes. It is often presumed that a top-down budget process leads to a smaller overall budget than a bottom-up budget process. Ferejohn and Krehbiel (1987) showed theoretically that this need not be the case. We test experimentally the theoretical predictions of their work. The evidence from these experiments lends strong support to their theory, both at the aggregate and the individual subject level.

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Publisher Info
Paper provided by SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich in its series Discussion Papers with number 146.

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Date of creation: Apr 2006
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Handle: RePEc:trf:wpaper:146

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Related research
Keywords: Budget processes; voting equilibrium; experimental economics;

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Find related papers by JEL classification:
H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Claudia Keser & Roy Gardner, 1999. "Strategic behavior of experienced subjects in a common pool resource game," International Journal of Game Theory, Springer, vol. 28(2), pages 241-252. [Downloadable!] (restricted)
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  2. Alberto Alesina & Roberto Perotti, 1994. "The Political Economy of Budget Deficits," NBER Working Papers 4637, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Eckel, Catherine & Holt, Charles A, 1989. "Strategic Voting in Agenda-Controlled Committee Experiments," American Economic Review, American Economic Association, vol. 79(4), pages 763-73, September. [Downloadable!] (restricted)
  4. Mark Hallerberg & Jürgen von Hagen, 1999. "Electoral Institutions, Cabinet Negotiations, and Budget Deficits in the European Union," NBER Chapters, in: Fiscal Institutions and Fiscal Performance, pages 209-232 National Bureau of Economic Research, Inc. [Downloadable!]
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  5. Alberto Alesina & Roberto Perotti, 1996. "Budget Deficits and Budget Institutions," NBER Working Papers 5556, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Selten, Reinhard, 1991. "Properties of a measure of predictive success," Mathematical Social Sciences, Elsevier, vol. 21(2), pages 153-167, April. [Downloadable!] (restricted)
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  7. Hallerberg, Mark & von Hagen, Jürgen, 1997. "Electoral Institutions, Cabinet Negotiations, and Budget Deficits within the European Union," CEPR Discussion Papers 1555, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  8. Marcel Boyer, 1999. "Les Expos, l'OSM, les universités, les hôpitaux : Le coût d'un déficit de 400 000 emplois au Québec = Expos, Montreal Symphony Orchestra, Universities, Hospitals: The Cost of a 400,000-Job Shortf," CIRANO Papers 99c-01, CIRANO. [Downloadable!]
  9. Jürgen von Hagen & Ian Harden, 1996. "Budget Processes and Commitment to Fiscal Discipline," IMF Working Papers 96/78, International Monetary Fund.
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  10. McKelvey, Richard D, 1979. "General Conditions for Global Intransitivities in Formal Voting Models," Econometrica, Econometric Society, vol. 47(5), pages 1085-1112, September. [Downloadable!] (restricted)
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