Mental Accounting in Local Public Sector Budgeting: An Empirical Analysis for the Flemish Municipalities

Bruno Heyndels and Frank Van Driessche
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Bruno Heyndels: Free University Brussels
Frank Van Driessche: Free University Brussels

Eastern Economic Journal, 1998, vol. 24, issue 4, 381-394

Abstract: Flemish municipalities collect revenue from different sources. The mental accounting framework suggests that the source of revenue affects the manner in which it is spent. We present an empirical test of this. Using a panel of 308 observations over the period 1989-1996 we analyze the responses of Flemish municipalities non-debt expenditures to changes in unconditional grants, tax revenues, and debt payments. Our results reveal the presence of significant flypaper effects in the case of grants and taxes, but not for debt.

Keywords: Municipalities; Revenue; Tax (search for similar items in EconPapers)
JEL-codes: H71 H77 (search for similar items in EconPapers)
Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:eej:eeconj:v:24:y:1998:i:4:p:381-394

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