The use of performance information in cutback budgeting

Abstract

This paper explores the use of performance information in budgetary decision-making during fiscal crisis. The theoretical part of the paper explains the markedly different predictions produced by the main theoretical approaches: agency theory, incrementalism, and interactive-dialogue theory. The empirical study of the Estonian case demonstrates that, in a fiscal crisis, performance information will not be used for making budgetary decisions due to time pressure, the political nature of the budgetary process, and limited analytical capacities. Lessons are given for international practice and future research.

Keywords:

• Cutback budgeting
• Estonia
• fiscal crisis
• performance budgeting
• performance information

The research leading to these results received funding from the European Union's Seventh Framework Programme under grant agreement No. 266887 (Project COCOPS), Socio-economic Sciences & Humanities and the Estonian Research Council grant No. IUT19-13.