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Budget Institutions and Government Effectiveness

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  • Momi Dahan
  • Michel Strawczynski

Abstract

Do budget institutions play a role in explaining why government effectiveness is higher in some advanced countries than in others? Employing an original panel dataset that spans four different years (1991, 2003, 2007 and 2012) we find that budget centralization has a negative and significant effect on government effectiveness in OECD countries after accounting for a list of control variables such as GDP per capita and government expenditure in addition to country and year fixed effects. We show that less centralized countries display significant better performance in health and infrastructure but similar effectiveness in tax collections. The negative impact of budget centralization seems to bite especially at the execution stage of the budgeting process, while it is not significant at the formulation and legislation stages. These results survive a list of sensitivity tests.

Suggested Citation

  • Momi Dahan & Michel Strawczynski, 2016. "Budget Institutions and Government Effectiveness," CESifo Working Paper Series 6219, CESifo.
    • Handle: RePEc:ces:ceswps:_6219
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    References listed on IDEAS

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    Cited by:

    1. Elok Heniwati, 2023. "Budget Absorption Phenomena: Evidence from Education Quality Assurance Institutions," Oblik i finansi, Institute of Accounting and Finance, issue 2, pages 101-110, June.

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    More about this item

    Keywords

    government effectiveness; budgeting process; bureaucratic autonomy;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems

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