Do Nasty and Pleasant Surprises Regarding Tax Revenue Explain Spending Drifts? The Case of the Swiss Cantons

Nils Soguel and Cécile Ecabert

International Journal of Public Administration, 2015, vol. 38, issue 4, 282-296

Abstract: This article aims to explain the difference between the expenditure reported in governmental end-of-the-year budgets and the amounts previously forecasted in the approved beginning-of-the-year budgets. We measure how political, financial, and institutional variables affect this spending drift. We focus on two much-debated factors, namely, tax revenue budgeting errors and the stringency of fiscal rules. Our econometric approach uses a panel based on the 26 Swiss cantons covering the period of 1980 to 2011. Results suggest that stringent fiscal rules discourage budget overruns, whereas underestimating tax revenue—i.e., a budgetary “pleasant surprise”—offers the opportunity for some overspending.

Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:taf:lpadxx:v:38:y:2015:i:4:p:282-296

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DOI: 10.1080/01900692.2015.999585

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