The Determinants of Government Budgetary Implementation: Policy Analysis of the Israeli Case

Abstract

This paper examines the determinants of budgetary implementation in multiparty parliamentary democracies. In such government systems, the likelihood of bureaucracies’ budgetary implementation increases when pro-spending parties take over welfare ministries. This happens since the parties’ electoral interests and bureaucrats’ organizational incentives coincide and aim at budgetary implementation. Likelihood of implementation decreases as the policy gap between the sides increases or when both politicians and bureaucrats have pro-market policy positions. When politicians and bureaucrats have different positions regarding implementation, budget implementation depends on politicians’ ability to monitor the bureaucracy. This ability increases when political parties have a strong bargaining power in a stable coalition. Other factors affecting implementation include stagnation in government budgetary spending, as well as macro-economic and national security concerns. These claims are validated using accounting reports of the Israeli government’s budget implementation from the years 2004 to 2008.