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Mental Accounting in Local Public Sector Budgeting: An Empirical Analysis for the Flemish Municipalities


  • Bruno Heyndels

    (Free University Brussels)

  • Frank Van Driessche

    (Free University Brussels)


Flemish municipalities collect revenue from different sources. The mental accounting framework suggests that the source of revenue affects the manner in which it is spent. We present an empirical test of this. Using a panel of 308 observations over the period 1989-1996 we analyze the responses of Flemish municipalities non-debt expenditures to changes in unconditional grants, tax revenues, and debt payments. Our results reveal the presence of significant flypaper effects in the case of grants and taxes, but not for debt.

Suggested Citation

  • Bruno Heyndels & Frank Van Driessche, 1998. "Mental Accounting in Local Public Sector Budgeting: An Empirical Analysis for the Flemish Municipalities," Eastern Economic Journal, Eastern Economic Association, vol. 24(4), pages 381-394, Fall.
  • Handle: RePEc:eej:eeconj:v:24:y:1998:i:4:p:381-394

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    Cited by:

    1. John Yinger & Phuong Nguyen-Hoang, 2015. "The Behavioral Impacts of Poverty Tax Relief: Salience or Framing?," Center for Policy Research Working Papers 186, Center for Policy Research, Maxwell School, Syracuse University.

    More about this item


    Municipalities; Revenue; Tax;

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism


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