Evaluating provincial budgetary policy

• Published in: Canadian Public Administration
• Main Authors: Jamieson, Barbara, Amirkhalkhali, Saleh
• Format: Article in Journal/Newspaper
• Language: English
• Published: Wiley 1988
• Subjects: Public Administration; Sociology and Political Science; Newfoundland
• Online Access: http://dx.doi.org/10.1111/j.1754-7121.1988.tb02145.x; https://api.wiley.com/onlinelibrary/tdm/v1/articles/10.1111%2Fj.1754-7121.1988.tb02145.x; https://onlinelibrary.wiley.com/doi/pdf/10.1111/j.1754-7121.1988.tb02145.x

Abstract: This paper reviews the period 1965‐84, providing an analysis of the contribution of provincial budgets to regional stabilization and the impact of budgets on the financial position of provincial governments. The perversity hypothesis, which proposes that provincial budgetary behaviour may serve to exacerbate rather than reduce cyclical swings in local economies, is examined. An effort is made to differentiate between the automatic and discretionary components of provincial budgets, by calculating cyclically and inflation‐adjusted revenues, expenditures and budget balances. A budget balance analysis arrives at the following conclusions: the behaviour of provincial budgets, including both automatic and discretionary components, was stabilizing, for the most part, during the study period; however, in most cases, discretionary budgetary policy was perverse. A regression analysis arrives at the following conclusions: in Newfoundland, New Brunswick, Manitoba and Saskatchewan, both revenue and expenditure policy demonstrated neutral cyclical behaviour during the study period; in Nova Scotia and British Columbia, destabilizing expenditure‐side behaviour offset stabilizing revenue‐side behaviour, while in Quebec, Ontario and Alberta, stabilizing expenditure changes may have dominated destabilizing revenue changes; in Nova Scotia and Manitoba, the long‐run rate of expenditure growth exceeded the rate of revenue growth, suggesting a possible structural deficit problem, while the other provinces appear to have exercised greater financial control; and provincial expenditure policy was affected by the electoral cycle, while revenue policy appears to have been unaffected. It is expected that provincial involvement in cyclical regulation will be limited in the immediate future and that the provinces will take further steps to shore up their finances, following the stresses that were imposed on their budgets by the last recession. Sommaire: Cet article passe en revue la période 1965–1984 et analyse le rôle des budgets ...