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.

Acknowledgements

Previous versions of this paper have been presented in the NEPSA, Israeli Political Science Association and European Public Choice Society 2010 annual conferences in which we enjoyed participants’ remarks and observations. The authors wish to thank the Interdisciplinary Center (IDC) Herzliya, the Political Science Department in Binghamton University and the American–Israeli Cooperation Enterprise (AICE) for funding various parts of this research. We wish to thank Eric Walsh for useful research assistance. We thank John C. Berg, William B. Heller, Jonathan Krasno, Michael D. McDonald, David Nachmias, Olga V. Shvetsova, Gregory Robinson and Joshua Zingher for useful comments and discussion of this paper. We also thank JCPA’s reviewers and editorial team for helping us improve this paper. All faults and errors are ours.

Notes

^1. For full description of the INES research process see: http://www.ines.tau.ac.il/elections.html

^2. Taken from: http://www.cbs.gov.il/shnaton60/st14_02x.pdf (accessed February 23, 2012).

^3. Retrieved from the bank of Israel: http://www.bankisrael.gov.il/deptdata/mehkar/doch09/heb/d2009te.htm (accessed February 23, 2012).

^4. Data can be viewed at: http://www.cbs.gov.il/reader/newhodaot/searh_text_hodaot.html?input_hod=\%e0\%e9+\%f9\%e5\%e5\%e9\%e5\%ef (accessed February 23, 2012).

^5. http://www.bankisrael.gov.il/deptdata/mehkar/doch08/eng/pe_3.pdf (accessed June 13, 2012). The data includes the gaps in inflation rates between the years.

^6. There is an ongoing discussion on mixed effects models and their terminology (Gelman and Hill 2007, pp. 244–246). Here we followed the terminology and denotation as used by Luke (2004). According to this terminology fixed effects are the model’s coefficients (level-1 variables in Multi-Level Modeling or MLM terminology) and random effects are the coefficients associated with between groups differences of the fixed effects model (level-2 variables in MLM).

^7. The significant outcomes are in bold font.

Additional information

Notes on contributors

Maoz Rosenthal

Dr. Maoz Rosenthal is a lecturer in the Lauder Government School in the Interdisciplinary Center (IDC) Herzliya. Dr. Rosenthal earned his PhD in Tel-Aviv University. He has held positions as a visiting Schusterman professor in the Political Science department of Binghamton University (SUNY), a visiting research fellow in Yale University’s McMillan Center and a post-doc fellow of Israel’s higher education council in the Open University of Israel.

Adam Wolfson

Adam Wolfson holds a LLB in law and a BA in government both from the Interdisciplinary Center (IDC) Herzliya. Mr. Wolfson currently teaches at the Radziner Law School in IDC. He is co-author of Fixing Israel’s Government (with Prof. Amnon Rubinstein) which won the Israeli Political Science Association “Book of the Year” award for 2012.