Does Performance Budgeting System Affect Fiscal Performance in Oecd Countries?

Abstract

Fiscal institutions tend to affect government deficit besides the macroeconomic variables. Fiscal institutions cover all rules and regulations in the budgetary process. Countries already have a standard performance budgeting framework to allocate budget resources. However, some countries don't connect performance information with budget results, which means that performance information has no effect on the budgetary result if targets are not met. This article investigates the relationship between budget deficit and performance budgeting system (II). More specifically, our aim is to investigate the relationship between general government deficit and performance budgeting system when there are no budgetary consequences if targets are not met. For this purpose, the 2016 OECD Performance Budgeting Survey data will be used to define the performance budgeting variables. The results show that countries which have budgetary consequences if targets are not met tend to have a lower government deficit.