A NEW THEORY OF THE BUDGETARY PROCESS

This paper offers an alternative to the view that budgetary decisions are incremental because they are complex, extensive, and conflicted. Our model interprets incrementalism as the result of a legislative political strategy in response to interest group politics and economic conditions. Accordingly...

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Bibliographic Details
Published in:Economics and politics 2006-03, Vol.18 (1), p.47-70
Main Authors: TOHAMY, SOUMAYA M., DEZHBAKHSH, HASHEM, ARANSON, PETER H.
Format: Article
Language:English
Subjects:
Budget economics
Budgeting
Budgets
Decision making
Economic Conditions
Economic models
Group dynamics
Inflation
Interest Groups
Legislators
Political behavior
Political economy
Political parties
Prediction
Public Debt
Public finance
Statistical methods
Studies
U.S.A
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Summary:This paper offers an alternative to the view that budgetary decisions are incremental because they are complex, extensive, and conflicted. Our model interprets incrementalism as the result of a legislative political strategy in response to interest group politics and economic conditions. Accordingly, a legislator chooses between single‐period budgeting or multiperiod budgeting, where single‐period budgeting is associated with a greater chance of non‐incremental budgeting outcomes. We use a statistical procedure developed by Dezhbakhsh et al. (2003) for identifying non‐incremental outcomes to test the implications of the model. Results support the model's predictions: a higher discount rate and a persistently large deficit appear to cause departures from incremental budgeting; Democrats' control over the political process have a similar effect, while a higher inflation rate has an opposite effect.
ISSN:0954-1985
1468-0343
DOI:10.1111/j.1468-0343.2006.00162.x