The Promise of Top-Down Budgeting

Abstract

The analysis so far suggests the existence of a fundamental trade-off in legislative budgeting. It appears that legislatures cannot control the budget process and produce a prudent budget at the same time. For those who believe that elected assemblies should play an active role in budgeting, a legislative pro-spending bias may simply represent the cost of democracy, but this is unsatisfactory for those concerned with fiscal management. Can this tension be reconciled? Can legislatures be both powerful as well as fiscally responsible? This chapter is dedicated to discussing this possibility both theoretically as well as empirically. It throws the spotlight on how legislatures make budgetary decisions, rather than the limits of their formal powers.