Mental Accounting in Local Public Sector Budgeting: An Empirical Analysis for the Flemish Municipalities
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.
Volume (Year): 24 (1998)
Issue (Month): 4 (Fall)
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