Abstract
The application of capital charges to core government agencies (those which produce tax-financed outputs) is one of a number of steps being taken by certain governments as part of a broader strategy to place such agencies upon a market footing. Capital charging involves the levying upon these agencies of charges designed to reflect the cost of the capital which they employ. This article presents a theoretical evaluation of capital charging which identifies the manner in which imperfect information, uncertainty and the expenditure control imperative undermine the system’s raison d’être.
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More From: Journal of Public Budgeting, Accounting & Financial Management
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