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Budget-maximizing governmental agencies: An empirical test

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  • Thomas McGuire

Abstract

Niskanen's theory of government budgeting, involving powerful agencies interested in maximizing their budgets through bargaining with a weak, poorly informed governmental ‘Sponsor’, has received wide recognition. This paper presents the first direct empirical tests of Niskanen's ideas. One implication of Niskanen's model of budgeting is that the demand for public services will appear to be elastic. Niskanen's model also implies restrictions on the elasticity of the derived demand for labor in the public sector. Neither set of predictions is supported by existing empirical research on government activity. Copyright Martinus Nijhoff Publishers 1981

Suggested Citation

  • Thomas McGuire, 1981. "Budget-maximizing governmental agencies: An empirical test," Public Choice, Springer, vol. 36(2), pages 313-322, January.
    • Handle: RePEc:kap:pubcho:v:36:y:1981:i:2:p:313-322
    DOI: 10.1007/BF00123787
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    References listed on IDEAS

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    1. Bergstrom, Theodore C & Goodman, Robert P, 1973. "Private Demands for Public Goods," American Economic Review, American Economic Association, vol. 63(3), pages 280-296, June.
    2. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December.
    3. Thomas McGuire & Michael Coiner & Larry Spancake, 1979. "Budget-maximizing agencies and efficiency in government," Public Choice, Springer, vol. 34(3), pages 333-357, September.
    4. Ehrenberg, Ronald G, 1973. "The Demand for State and Local Government Employees," American Economic Review, American Economic Association, vol. 63(3), pages 366-379, June.
    5. Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65(2), pages 135-135.
    6. Gordon Tullock, 1974. "Dynamic hypothesis on bureaucracy," Public Choice, Springer, vol. 19(1), pages 127-131, September.
    7. Niskanen, William A, 1975. "Bureaucrats and Politicians," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 617-643, December.
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    Cited by:

    1. Kenneth Mackenzie, 1999. "Diseño institucional y política pública: una perspectiva microeconómica," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 1(1), pages 17-58, July-dece.
    2. Stephen Mehay & Kenneth Seiden, 1986. "Municipal residency laws and local public budgets," Public Choice, Springer, vol. 48(1), pages 27-35, January.
    3. Venetoklis, Takis, 2001. "Business Subsidies and Bureaucratic Behaviour," Research Reports 79, VATT Institute for Economic Research.
    4. Pal, Rupayan & Sharma, Ajay, 2013. "Endogenizing governments' objectives in tax competition," Regional Science and Urban Economics, Elsevier, vol. 43(4), pages 570-578.
    5. Jan Brueckner & Kevin O'Brien, 1989. "Modeling government behavior in collective bargaining: A test for self-interested bureaucrats," Public Choice, Springer, vol. 63(1), pages 15-41, October.
    6. Benito Arruñada, 2000. "Gestión de la competencia en el sector público," Economics Working Papers 490, Department of Economics and Business, Universitat Pompeu Fabra.
    7. Kevin M. O'Brien, 1997. "Do Municipal Residency Laws Affect Labour Market Outcomes?," Urban Studies, Urban Studies Journal Limited, vol. 34(11), pages 1759-1769, November.
    8. Charlotte Twight, 1988. "Government manipulation of constitutional-level transaction costs: A general theory of transaction-cost augmentation and the growth of government," Public Choice, Springer, vol. 56(2), pages 131-152, February.
    9. Venetoklis, Takis, 2001. "Business Subsidies and Bureaucratic Behaviour - A Revised Approach," Research Reports 83, VATT Institute for Economic Research.

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