1887

OECD Journal on Budgeting

The OECD journal on public sector budgeting, published three times per year. It draws on the best of the recent work of the OECD Working Party of Senior Budget Officials (SBO), as well as special contributions from finance ministries, and makes it available to a wider community in an accessible format. The journal provides insight on leading-edge institutional arrangements, systems and instruments for the allocation and management of resources in the public sector. Now published as a part of the OECD Journal subscription package.

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Aggregate expenditure ceilings and allocative flexibility

This article shows how to combine top-down budgeting – in the core sense of the establishment of a hard aggregate expenditure ceiling at the start of the budget preparation process – with flexibility in the allocation of the aggregate ceiling between spending ministries during budget preparation. It argues strongly against determining spending ministry shares of the aggregate expenditure ceiling without any prior opportunity for them to present formal new spending proposals. The keys to reconciling top-down budgeting with allocative flexibility are: the baseline/new policy distinction; good forward estimates; a government-wide new policy pool; and spending review.

JEL classification: E620, H610

Keywords: Fiscal policy, budget preparation process, top-down budgeting, expenditure ceiling, bottom-up spending requests, fiscal space, multi-year ceilings, baseline ceilings, allocative efficiency, aggregate fiscal discipline, budgeting techniques

English

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