DOES PERFORMANCE BUDGETING SYSTEM AFFECT FISCAL PERFORMANCE IN OECD COUNTRIES?

Abstract

Fiscal institutions tend to influence government deficits in addition to macroeconomic variables. Fiscal institutions encompass all rules and regulations governing the budgetary process. Many countries have adopted performance budgeting frameworks to allocate budget resources; however, in some cases, performance information is not linked to budget outcomes, meaning that it has no effect on fiscal results when targets are not met. This article investigates the relationship between budget deficits and performance budgeting systems. More specifically, it examines the relationship between the general government deficit and performance budgeting when there are no budgetary consequences for failing to meet targets. For this purpose, data from the 2016 OECD Performance Budgeting Survey are used to define performance budgeting variables. The results indicate that countries with budgetary consequences for unmet targets tend to have lower government deficits.

Data:
Received: 10 Sep 2019
Revised: 29 Oct 2019
Accepted: 6 Dec 2019
Published: 20 Dec 2019