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Does accrual accounting alter fiscal policy decisions? Evidence from Germany

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  • Christofzik, Désirée I.

Abstract

Many governments have replaced traditional cash-based accounting with some form of accrual-based accounting system. However, empirical evidence on the effects of the public accounting system on fiscal policy is scarce. Following rules by the federal states, municipalities in Germany have adopted accrual-based accounting systems gradually. By exploiting variations over time and across states I find no evidence for an impact on the overall financial balance. However, my findings suggest that accrual accounting has altered the structure of the budget. Revenues from the sales of non-financial assets have decreased significantly. This supports the hypothesis that municipalities had used these one-off measures before to meet fiscal constraints. Using data on entities controlled by the municipalities, the analysis provides no evidence for repercussions on these public funds, institutions or enterprises.

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  • Christofzik, Désirée I., 2019. "Does accrual accounting alter fiscal policy decisions? Evidence from Germany," Working Papers 06/2019, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung.
  • Handle: RePEc:zbw:svrwwp:062019
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    Cited by:

    1. Christofzik, Desirée I. & Feld, Lars P. & Yeter, Mustafa, 2019. "Öffentliche Investitionen: Wie viel ist zu wenig?," Freiburg Discussion Papers on Constitutional Economics 19/02, Walter Eucken Institut e.V..
    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. Boysen-Hogrefe, Jens & Felbermayr, Gabriel & Kooths, Stefan & Laaser, Claus-Friedrich & Rosenschon, Astrid & Stolzenburg, Ulrich, 2020. "Finanzpolitik mit Weitblick ausrichten," Kieler Beiträge zur Wirtschaftspolitik 30, Kiel Institute for the World Economy (IfW).
    4. Florian Dorn & Stefanie Gaebler & Felix Roesel, 2021. "Ineffective fiscal rules? The effect of public sector accounting standards on budgets, efficiency, and accountability," Public Choice, Springer, vol. 186(3), pages 387-412, March.
    5. Stephan Stüber & Désirée I. Christofzik & Florian Dorn & Stefanie Gäbler & Christian Raffer & Felix Rösel, 2021. "Debatte über die Doppik: Replik und Erwiderung [Debate about Accural Accounting – Reply and Response]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 101(2), pages 138-143, February.
    6. 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.
    7. 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.
    8. Viera Papcunová & Jarmila Hudáková & Michaela Štubňová & Marta Urbaníková, 2020. "Revenues of Municipalities as a Tool of Local Self-Government Development (Comparative Study)," Administrative Sciences, MDPI, Open Access Journal, vol. 10(4), pages 1-23, December.
    9. Feld, Lars P. & Schmidt, Christoph M. & Schnabel, Isabel & Truger, Achim & Wieland, Volker, 2019. "Den Strukturwandel meistern. Jahresgutachten 2019/20," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201920.

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    More about this item

    Keywords

    public sector accounting; accrual accounting; local public policy; fiscal rules; stock-flow adjustments;
    All these keywords.

    JEL classification:

    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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