Long-run and short-run budgeting

Empirical evidence for canada, uk, and usa

Bibliographic Data

ID20201754
AuthorsChristopher G Reddick (0000-0002-3882-5302, The University of Texas at San Antonio), Seid Y Hassan (Murray State University)
Year2003
Volume15
Issue3
Pages354-379
Publication date2003-03-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueJournal of Public Budgeting Accounting & Financial Management (JOURNAL)
Journal identifiersISSN: 1096-3367 • E-ISSN: 1945-1814
PublisherEmerald (PUBLISHER)
DOI10.1108/jpbafm-15-03-2003-b003
OpenAlexW2774631938
LanguageEN
Citations received3
References cited43

This paper tests public budgeting as a long-run and short-run process; political decision makers strive to head toward budgetary balance over the long run but are constrained in the short run and follow incremental decision-making. First, the budget equilibrium theory is stated and is used to explain the relationship between revenues and expenditures. Second, the interaction between expenditures and revenues is tested with a vector error correction model for Canada, UK and the US, using annual time series data between 1948 and 2000. The results show that, in the long-run, revenues are the driving force behind the budget in Canada; in the UK expenditures force the budget toward balance. In the short-run, incrementalism occurs in both of these countries. The most interesting finding is for the United States where on-budget revenues and expenditures both push the budget toward balance over the longrun but there is no incrementalism in the process in the short-run. This, of course, is contrary to much of the existing literature

Budget process · Economics · Empirical evidence · Incrementalism · Macroeconomics · Political science · Politics · Revenue · Short run · Fiscal Policies and Political Economy · Fiscal Policy and Economic Growth · Local Government Finance and Decentralization · Finance

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