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Capital Budgeting

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  • First Online:
Global Encyclopedia of Public Administration, Public Policy, and Governance

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Synonyms

Investment decision-making or capital expenditure decisions; Long-term planning; Planning capital expenditure

Definition

The process in which a business determines whether projects such as building a new plant or investing in a long-term venture are worth pursuing.

In the public sector, the term is often exclusively associated with infrastructure investments – plant and equipment. It is more properly associated with all policy choices that have significant, long-term consequences. The purchase of a central computer system, establishing or expanding public utility services, and implementing new public transportation systems are examples of capital asset acquisitions that are considered by public sector organizations.

Introduction

One of the most vital functions of the public sector entity is to construct, maintain, and develop the public works infrastructure. Capital investments including roadways, bridges, sanitary sewers, water mains, and other essential public facilities...

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References

  • Dorotinsky W (2008) Capital budgeting and public financial management–part I & II. Published on IMF’s PFM Blog at http://blog-pfm.imf.org

  • Froot KA, Stein JC (1998) Risk management, capital budgeting, and capital structure policy for financial institutions: an integrated approach. J Financ Econ 47(1):55–82

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  • Holtz-Eakin D (1992) Public-sector capital and the productivity puzzle (No. w4122). National Bureau of Economic Research, Cambridge, MA

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  • Kee R, Robbins W (1991) Capital budgeting in the public sector: a comparative analysis. J Managerial Issues 3(3):288–302

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  • Poterba JM (1995) Capital budgets, borrowing rules, and state capital spending. J Public Econ 56(2):165–187

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Author information

Authors and Affiliations

  1. Department of Mathematics, Computer Science and Economics, University of Basilicata, Via Ateneo Lucano, 10, 85100, Potenza (PZ), Italy

    Natalia Aversano

Authors
  1. Natalia Aversano
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Corresponding author

Correspondence to Natalia Aversano .

Editor information

Editors and Affiliations

  1. Florida Atlantic University, Boca Raton, Florida, USA

    Ali Farazmand

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© 2016 Springer International Publishing Switzerland

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Aversano, N. (2016). Capital Budgeting. In: Farazmand, A. (eds) Global Encyclopedia of Public Administration, Public Policy, and Governance. Springer, Cham. https://doi.org/10.1007/978-3-319-31816-5_2328-1

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  • DOI: https://doi.org/10.1007/978-3-319-31816-5_2328-1

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  • Publisher Name: Springer, Cham

  • Online ISBN: 978-3-319-31816-5

  • eBook Packages: Springer Reference Economics and FinanceReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences

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