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Divided We Fall. Conflicts of Interests Regarding Fiscal Discipline in Municipal Hierarchies

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Abstract

Persistent budget deficits are commonly blamed on irresponsible governments. However, even if the government is fiscally responsible, the agents in charge of implementing the budget may be less concerned about fiscal discipline. According to the survey data analyzed in this paper, such conflicts of interests are associated with low fiscal performance and prevail in almost half of the Swedish municipalities. The empirical analysis points at some organizational features that may affect the prevalence of conflicts, and also indicates that conflicts may arise for reasons exogenous to the organization.

Suggested Citation

  • Ellegård, Lina Maria, 2013. "Divided We Fall. Conflicts of Interests Regarding Fiscal Discipline in Municipal Hierarchies," Working Papers 2013:42, Lund University, Department of Economics.
  • Handle: RePEc:hhs:lunewp:2013_042
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    File URL: http://project.nek.lu.se/publications/workpap/papers/WP13_42.pdf
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    More about this item

    Keywords

    local governments; fiscal discipline; conflict of interests; organization;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation

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