Late Budgets

TY - JOUR

T1 - Late Budgets

AU - Andersen, Asger Lau

AU - Lassen, David Dreyer

AU - Nielsen, Lasse Holbøll Westh

N1 - Jel Classification: C78, D72, H61, H72

PY - 2012/11

Y1 - 2012/11

N2 - The budget forms the legal basis for government spending, and timely budgets, enacted before the new fiscal year, are an integral part of good governance. This paper examines the causes of late budgets using a unique dataset of budget completion dates for US state governments 1988-2007, constructed from news reports and state budget office surveys. We find 23 percent of state budgets to be late. We show that changing economic circumstances and divided government are the driving forces behind late budgets, which is consistent with a war-of-attrition bargaining model featuring budget baselines and preferences over deviations from such baselines.

AB - The budget forms the legal basis for government spending, and timely budgets, enacted before the new fiscal year, are an integral part of good governance. This paper examines the causes of late budgets using a unique dataset of budget completion dates for US state governments 1988-2007, constructed from news reports and state budget office surveys. We find 23 percent of state budgets to be late. We show that changing economic circumstances and divided government are the driving forces behind late budgets, which is consistent with a war-of-attrition bargaining model featuring budget baselines and preferences over deviations from such baselines.

U2 - 10.1257/pol.4.4.1

DO - 10.1257/pol.4.4.1

M3 - Journal article

SN - 1945-7731

VL - 4

SP - 1

EP - 40

JO - American Economic Journal: Economic Policy

JF - American Economic Journal: Economic Policy

IS - 4

ER -