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Late Budgets

  • Asger Lau Andersen
  • David Dreyer Lassen
  • Lasse Holb�ll Westh Nielsen

The budget forms the legal basis for government spending, and timely budgets, enacted before the new fiscal year, are an integral part of good governance. This paper examines the causes of late budgets using a unique dataset of budget completion dates for US state governments 1988-2007, constructed from news reports and state budget office surveys. We find 23 percent of state budgets to be late. We show that changing economic circumstances and divided government are the driving forces behind late budgets, which is consistent with a war-of-attrition bargaining model featuring budget baselines and preferences over deviations from such baselines. (JEL C78, D72, H61, H72)

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/pol.4.4.1
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File URL: http://www.aeaweb.org/aej/pol/data/2010-0229_data.zip
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Article provided by American Economic Association in its journal American Economic Journal: Economic Policy.

Volume (Year): 4 (2012)
Issue (Month): 4 (November)
Pages: 1-40

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Handle: RePEc:aea:aejpol:v:4:y:2012:i:4:p:1-40
Note: DOI: 10.1257/pol.4.4.1
Contact details of provider: Web page: https://www.aeaweb.org/aej-policy
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  9. Merlo, A., 1992. "Bargaining Over Governments in a Stochastic Environment," Working Papers 92-55, C.V. Starr Center for Applied Economics, New York University.
  10. Hsieh, Chang-Tai, 2000. "Bargaining over reform," European Economic Review, Elsevier, vol. 44(9), pages 1659-1676, October.
  11. James M. Poterba & Jürgen von Hagen, 1999. "Introduction to "Fiscal Institutions and Fiscal Performance"," NBER Chapters, in: Fiscal Institutions and Fiscal Performance, pages 1-12 National Bureau of Economic Research, Inc.
  12. Nannestad, Peter & Paldam, Martin, 1997. "The grievance asymmetry revisited: A micro study of economic voting in Denmark,1986-1992," European Journal of Political Economy, Elsevier, vol. 13(1), pages 81-99, February.
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