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Ineffective fiscal rules? The effect of public sector accounting standards on budgets, efficiency, and accountability

Author

Listed:
  • Dorn, Florian
  • Gaebler, Stefanie
  • Roesel, Felix

Abstract

International organizations have encouraged national governments to switch from traditional cash-based to business-like accrual accounting, on the presumption that long-run benefits may outweigh substantial implementation and operating costs.We use a quasi-experimental setting to evaluate whether changing public sector accounting standards is justified. Some local governments in the German federal state of Bavaria introduced accrual accounting while others retained cash-based accounting. Difference-in-differences and event-study results do not show that (capital) expenditures, public debt, voter turnout, or government efficiency developed differently after changes in accounting standards. Operating costs of administration, however, increase under accrual accounting.

Suggested Citation

  • Dorn, Florian & Gaebler, Stefanie & Roesel, Felix, 2019. "Ineffective fiscal rules? The effect of public sector accounting standards on budgets, efficiency, and accountability," Munich Reprints in Economics 78263, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:78263
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    Cited by:

    1. Brändle, Thomas & Elsener, Marc, 2023. "Do fiscal rules matter? A survey on recent evidence," Working papers 2023/07, Faculty of Business and Economics - University of Basel.
    2. Raffer, Christian, 2020. "Accrual Accounting and the Local Government Budget - A Matching Evaluation," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224630, Verein für Socialpolitik / German Economic Association.
    3. Bessho, Shun-ichiro & Hirota, Haruaki, 2023. "Do public account financial statements matter? Evidence from Japanese municipalities," European Journal of Political Economy, Elsevier, vol. 78(C).
    4. Teresa Martyniuk & Mykola Bondar & Marzena Remlein & Olena Tsiatkovska & Nataliia Ostapiuk, 2024. "Accounting of infrastructure assets of state institutions as an element of sustainable development goals," RIVISTA DI STUDI SULLA SOSTENIBILITA', FrancoAngeli Editore, vol. 0(1), pages 193-207.
    5. Haruo Kondoh & Akinobu Ogawa, 2023. "The Relationship between Utilization of Financial Statements by Local Governments and Their Fiscal Behavior," Public Policy Review, Policy Research Institute, Ministry of Finance Japan, vol. 19(2), pages 1-24, August.
    6. Long Qian & Yunjie Zhou & Ying Sun, 2023. "Regional Differences, Distribution Dynamics, and Convergence of the Green Total Factor Productivity of China’s Cities under the Dual Carbon Targets," Sustainability, MDPI, vol. 15(17), pages 1-26, August.
    7. Thomas Brändle & Marc Elsener, 2024. "Do fiscal rules matter? A survey of recent evidence," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 160(1), pages 1-38, December.
    8. Blesse, Sebastian & Dörr, Luisa & Dorn, Florian & Lay, Max, 2026. "Do fiscal rules undermine public investments? A review of empirical evidence," European Journal of Political Economy, Elsevier, vol. 91(C).
    9. D’Inverno, Giovanna & Vidoli, Francesco & De Witte, Kristof, 2023. "Sustainable budgeting and financial balance: Which lever will you pull?," European Journal of Operational Research, Elsevier, vol. 309(2), pages 857-871.
    10. del Castillo, Ernesto & Cabral, René, 2024. "Subnational public debt sustainability in Mexico: Is the new fiscal rule working?," European Journal of Political Economy, Elsevier, vol. 82(C).
    11. Potrafke, Niklas, 2025. "The economic consequences of fiscal rules," Journal of International Money and Finance, Elsevier, vol. 153(C).
    12. Israel García, 2023. "Budget Forecast Errors in Spanish Municipalities: The Role of Transparency," MAGKS Papers on Economics 202327, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    13. Ludger Schuknecht & Christoph A. Schaltegger & Michele Salvi & Jan Schnellenbach & Thomas Lenk & Christian Bender & Mario Hesse & Gert G. Wagner & Stefan Korioth & Klaus Gründler & Philipp Heil & Nikl, 2021. "Zankapfel Schuldenbremse: Bewährtes Instrument auch in Krisenzeiten?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 74(04), pages 03-30, April.
    14. ENWEREJI, Prince Chukwuneme, 2022. "Enhancing Financial Accountability In South African Local Municipalities: A Consequence Management Viewpoint," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 26(4), pages 19-47, December.
    15. Désirée I. Christofzik & Florian Dorn & Stefanie Gäbler & Christian Raffer & Felix Rösel, 2020. "Bremst die Doppik öffentliche Investitionen? Ergebnisse aus drei aktuellen Evaluationsstudien [Does Accrual Accounting Reduce Public Investment? Evidence from Three Recent Evaluation Studies]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 100(9), pages 707-711, September.
    16. Florian Dorn, 2021. "Elections and Government Efficiency," ifo Working Paper Series 363, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    17. Herrero-Alcalde, Ana & Martín-Román, Javier & Tránchez-Martín, José Manuel & Moral-Arce, Ignacio, 2024. "Fiscal rules to the test: The impact of the Spanish expenditure rule," European Journal of Political Economy, Elsevier, vol. 81(C).
    18. Ogawa, Akinobu & Kondoh, Haruo, 2025. "The impact of accrual accounting on the cost efficiency of municipally controlled enterprises: Evidence from the Japanese municipal sewerage system," MPRA Paper 123711, University Library of Munich, Germany.
    19. Gootjes, Bram & de Haan, Jakob, 2022. "Do fiscal rules need budget transparency to be effective?," European Journal of Political Economy, Elsevier, vol. 75(C).

    More about this item

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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