The purpose of this paper is to analyse, in terms of presence, determinants and purposes, the misrepresentation of expected revenues during budget formulation and the misrepresentation of actual revenues during budget execution. To this end, we use six- year panel data from Italian municipalities with populations above 15,000. Our results suggest that overestimations of current revenues are more frequent than underestimations, during both budget formulation and budget execution. In terms of determinants, our results highlight the impact on revenue misrepresentation of both political orientation and fiscal stress. Finally, in terms of purposes, we show that revenue underestimation during budget formulation and revenue overestimation during budget execution may contribute to the formation of surpluses. The former, in particular, may allow mayors to create a ‘war chest’ in non-election years, which can then be used to increase net borrowing on the eve of elections.

Anessi Pessina, E., Sicilia, M. F., Biased Budgeting in the Public Sector: Evidence from Italian Local Governments, <<LOCAL GOVERNMENT STUDIES>>, 2015; 41 (6): 819-840. [doi:10.1080/03003930.2015.1012194] [http://hdl.handle.net/10807/65408]

Biased Budgeting in the Public Sector: Evidence from Italian Local Governments

Anessi Pessina, Eugenio;Sicilia, Maria Francesca
2015

Abstract

The purpose of this paper is to analyse, in terms of presence, determinants and purposes, the misrepresentation of expected revenues during budget formulation and the misrepresentation of actual revenues during budget execution. To this end, we use six- year panel data from Italian municipalities with populations above 15,000. Our results suggest that overestimations of current revenues are more frequent than underestimations, during both budget formulation and budget execution. In terms of determinants, our results highlight the impact on revenue misrepresentation of both political orientation and fiscal stress. Finally, in terms of purposes, we show that revenue underestimation during budget formulation and revenue overestimation during budget execution may contribute to the formation of surpluses. The former, in particular, may allow mayors to create a ‘war chest’ in non-election years, which can then be used to increase net borrowing on the eve of elections.
Inglese
Anessi Pessina, E., Sicilia, M. F., Biased Budgeting in the Public Sector: Evidence from Italian Local Governments, <<LOCAL GOVERNMENT STUDIES>>, 2015; 41 (6): 819-840. [doi:10.1080/03003930.2015.1012194] [http://hdl.handle.net/10807/65408]
File in questo prodotto:
File Dimensione Formato  
3326-Anessi-Pessina-2015.pdf

non disponibili

Tipologia file ?: Versione Editoriale (PDF)
Licenza: Non specificato
Dimensione 516.37 kB
Formato Unknown
516.37 kB Unknown   Visualizza/Apri

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10807/65408
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 20
  • ???jsp.display-item.citation.isi??? 17
social impact