Input Controls in the Public Sector: What Does Economic Theory offer?

International Monetary Fund

No 1988/059, IMF Working Papers from International Monetary Fund

Abstract: This paper reviews the economic literature on bureaucratic behavior, the theory of the firm, and agency theory and its application to the public sector, to determine whether any lessons can be drawn regarding how far governments should go in delegating control over inputs to public sector managers. Against a background survey of country practices, the paper concludes that input controls are one of a number of ways of dealing with the agency problem of trying to ensure that bureaucrats act in the interests of the government. Other methods can be, and have been, used for dealing with moral hazard-type agency problems, but features of current budgetary systems make it more difficult to deal with inputs that have implications for future resource use.

Keywords: WP; government policy; bureau manager; cost of capital; demand function; decision-making power government; government bureau; assessment of performance; opportunity cost; Budget planning and preparation; Public sector; Current spending; Capital spending (search for similar items in EconPapers)
Pages: 40
Date: 1988-01-01
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Citations: View citations in EconPapers (4)

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