This book provides an introduction to the positive theory of the budgetary process based on the theory of public choice. Although budgetary institutions are very diverse, both between and within countries, it is possible to identify key elements which are common to all forms of representative government. The author identifies these key elements as the supply of services by public agencies; demand for services by political bodies (cabinet, houses of parliament, etc); negotiations between administrators of agencies and political bodies in an 'internal market'; and decision-making in the form of budgetary and substantive legislation. The book develops a step-by-step model which incorporates all these elements, a model which can be used to explain and predict budgetary decisions in existing institutions, as well as to analyze institutional change, including cost budgeting and various forms of privatization.
• Offers an introduction to public choice approach to budget-making; will be used as a text on public finance and public economics courses, but also guide for government officials • Develops a step-by-step model, but also provides analysis of applications of model - e.g. to cost-cutting and privatization • Highly acclaimed: 'This book is of considerable scholarly importance, and a practical guide' - Professor Gordon Tullock, University of Arizona
1. Introduction; 2. The structure of the budgetary process; 3. Demand in the public sector; 4. Supply in the public sector; 5. Political decision-making; 6. Bureaucratic decision-making; 7. Institutions; 8. Ways to reform.
'… Kraan's book represents an impressive and innovative example of how a general shift from normative to positive analysis may shape our insight into complex fiscal matters … The author is among the very few who have at their command mathematical skill and knowledge of economic theory as well as political and administrative experience … He explains the material in a way which makes it accesssible also to the non mathematically trained practioners in the field: the main text presents the arguments verbally, supported by very helpful graphical illustrations, whereas technical material is relegated to appendices.' Robert K. Von Weizsäcker, The Economic Journal