Advanced

Institutions improving fiscal performance: evidence from Swedish municipalities

Dietrichson, Jens LU and Ellegård, Lina Maria LU (2015) In International Tax and Public Finance 22(5). p.861-886
Abstract
Conflicts of interest within hierarchic government organizations regarding the importance of fiscal discipline create the need for institutions that curb the bargaining power of units in charge of implementing policy and align their incentives to the interests of the whole organization. We examine this general public sector problem by collecting unique data on budget institutions and conflicts of interest within the Swedish municipalities. Our estimations suggest that institutions pertaining to both the planning stage and the implementation stage of the budget process are important for fiscal performance. The fiscal surplus is higher in municipalities that have centralized their budget process to some degree, and where local committees are... (More)
Conflicts of interest within hierarchic government organizations regarding the importance of fiscal discipline create the need for institutions that curb the bargaining power of units in charge of implementing policy and align their incentives to the interests of the whole organization. We examine this general public sector problem by collecting unique data on budget institutions and conflicts of interest within the Swedish municipalities. Our estimations suggest that institutions pertaining to both the planning stage and the implementation stage of the budget process are important for fiscal performance. The fiscal surplus is higher in municipalities that have centralized their budget process to some degree, and where local committees are allowed to carry over surpluses or forced to carry over deficits between fiscal years. The associations however differ between municipalities with different degrees of conflicts of interests, calling for further research to understand the incentives given by the result carry-over rules. We further find that the fiscal surplus is higher in municipalities where local managers face a relatively high risk of dismissal as a consequence of budget deficits. (Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Local governments, Conflicts of interest, Fiscal performance, Budget institutions
in
International Tax and Public Finance
volume
22
issue
5
pages
861 - 886
publisher
Kluwer
external identifiers
  • wos:000361900600009
  • scopus:84942504368
ISSN
1573-6970
DOI
10.1007/s10797-014-9334-z
language
English
LU publication?
yes
id
4f093aca-b9fc-439a-b172-8e34ea2b60c9 (old id 8232279)
date added to LUP
2015-11-27 09:41:04
date last changed
2017-10-01 03:59:51
@article{4f093aca-b9fc-439a-b172-8e34ea2b60c9,
  abstract     = {Conflicts of interest within hierarchic government organizations regarding the importance of fiscal discipline create the need for institutions that curb the bargaining power of units in charge of implementing policy and align their incentives to the interests of the whole organization. We examine this general public sector problem by collecting unique data on budget institutions and conflicts of interest within the Swedish municipalities. Our estimations suggest that institutions pertaining to both the planning stage and the implementation stage of the budget process are important for fiscal performance. The fiscal surplus is higher in municipalities that have centralized their budget process to some degree, and where local committees are allowed to carry over surpluses or forced to carry over deficits between fiscal years. The associations however differ between municipalities with different degrees of conflicts of interests, calling for further research to understand the incentives given by the result carry-over rules. We further find that the fiscal surplus is higher in municipalities where local managers face a relatively high risk of dismissal as a consequence of budget deficits.},
  author       = {Dietrichson, Jens and Ellegård, Lina Maria},
  issn         = {1573-6970},
  keyword      = {Local governments,Conflicts of interest,Fiscal performance,Budget institutions},
  language     = {eng},
  number       = {5},
  pages        = {861--886},
  publisher    = {Kluwer},
  series       = {International Tax and Public Finance},
  title        = {Institutions improving fiscal performance: evidence from Swedish municipalities},
  url          = {http://dx.doi.org/10.1007/s10797-014-9334-z},
  volume       = {22},
  year         = {2015},
}