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Late Budgets

Asger Lau Andersen, David Lassen () and Lasse Holbøll Westh Nielsen

American Economic Journal: Economic Policy, 2012, vol. 4, issue 4, 1-40

Abstract: 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. (JEL C78, D72, H61, H72)

JEL-codes: C78 D72 H61 H72 (search for similar items in EconPapers)
Date: 2012
Note: DOI: 10.1257/pol.4.4.1
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