Author(s): Jorge, Susana ; Cerqueira, Pedro ; Furtado, Sofia
Date: 2022
Persistent ID: https://hdl.handle.net/10316/114942
Origin: Estudo Geral - Universidade de Coimbra
Project/scholarship: info:eu-repo/grantAgreement/FCT/6817 - DCRRNI ID/UIDB/PT; info:eu-repo/grantAgreement/other/00758//other;
Subject(s): Local finance; budget inflation; budgetary determinants; institutional determinants; political determinants; dynamic panel analysis
This paper investigateswhich factors affect revenue over-budgeting in the local government,considering budgetary, political, and institutional determinants. It appliesdynamic panels analysis to data from Portuguese municipalities between 2005 and2017. Regarding budgetary arrangements, over-budgeting has implications forseveral years, taking up to three years to dissipate. The difference between budgetedrevenues and the ones collected in the previous year is a good predictor thatrevenue is overestimated. The ratio of own-source over total revenue isdirectly related with over-budgeting; however, this effect comes from the municipality’swealth. About political factors, municipal Executives with political majoritiesand in electoral years are more prone to over-budget; however, ideology does not seem to be important. Asfor institutional arrangements, participationin any debt restructuring program is inversely related to over-budgeting, whileexcessive debt does not seem to play any role. Overall, the only mechanismwhich reduces over-budgeting misbehavior is external control.
