Suchergebnisse

Abstract. The article addresses a public sector principal‐agent relationship under a financial regime of block grants. Two types of questions arise in principal‐agent relations in this setting. The first is whether a public sector agent can force the principal to approve budgets that are away from the principal's ideal point, or if it is the principal that is the strong party in the relationship and can determine the agent's budget. The second is whether the agent can exploit a situation of asymmetric information or neglect from the principal, to lower efficiency. Predictions from different assumptions of the principal‐agent relationship are empirically tested on data from counties and county run hospitals in Norway. Results show that counties have the upper hand in the relationship and can set hospital budgets. However, agents reduce efficiency when budgets are increased and counties can not prevent efficiency from falling by monitoring the agent. Under a block grant financing system counties face a tradeoff between cost‐efficiency and production. Low budgets lead to high efficiency and low production. High budgets lead to low efficiency and high production.

In the 1990s, the Norwegian hospital sector was characterized by soft budgetary constraints and increasing budget deficits. This was one of the main antecedents of the 2002 hospital reform, where the central state took over ownership of the hospitals from the counties. Arguably, the centralization of ownership, financing and production would harden the budget constraints and increase the budgetary discipline. This analysis shows that this has not been accomplished. Instead, the production has been far above what was planned, and the deficits higher than ever. Two stages of the post‐reform budget processes are analyzed: first, the stage where the central state set the budgets and sends signals of budgetary rules (whether the state sends signals of soft or hard budget constraints), and second, how the central state handled deficits in the hospital sector as they emerged (whether the hospitals was bailed out or not). The conclusion is that the central state neither set a hard budget constraint nor managed to stay firm as deficits turned up. It is argued that three mechanisms explain the prevailing problems of managing the hospital sector: uncertainty of the hospitals' financial situation during the transition phase; minority governments; and specific features related to the organization of the budgetary process in parliament.

Abstract.  Budgeting can be understood as a common resource pool problem where spending agencies have incentives to encourage excessive levels of current spending and reduce budget surplus or create budget deficits. The political leadership is assumed to have an important role in keeping fiscal control and resisting the high‐demanders' pressure for increased spending. Three factors of relevance for their success are investigated: political characteristics (political colour and political strength, the strength of relevant interest groups) and two institutional characteristics– committee structure and budgeting procedures. The analyses are based on panel data from up to 434 Norwegian municipalities in the period from 1991 to 1998. The results support the hypothesis that strong political leadership improves fiscal performance. The effect of interest groups is to a high degree community‐specific. However, an increased share of elderly reduces fiscal surplus. Differences in budgetary procedures do not seem to affect fiscal performance. A strong committee structure seems, on the other hand, to result in better fiscal performance than a weaker one.

The correspondence between citizens' preferences and the preferences of the elected politicians is a critical concern of democratic institutions. Models founded on the central tendency of politicians' behaviour in elections, such as the median‐voter model and the model of the "uncovered set", predict that politicians respond to local demands. Other models, notably those that assume imperfectly informed citizens and representatives, predict lack of response. The present article relies on a demand model. We estimate the model by combining survey data for 80 Norwegian municipalities with information on economic, social and demographic factors. The study uses independent surveys to measure the spending preferences of citizens and representatives. The politicians' and the citizens' demand functions are structurally similar, and the article demonstrates that the spending preferences of the representatives are positively related to preferences of the electorate. Alternative interpretations of these findings are discussed.