Case Study Analysis: Public Finance And Budgeting

758 Words4 Pages
Nazarzoda Parviz
ID 1B6048
Course: Public Finance and Budgeting Homework III
Q1) Explain Niskansen’s characterization of bureaucrats as budget maximizing, as well as critiques of that view, in the contexts of your home country’s bureaucracy. How have changes in the current economy and modern public management practices altered the budget behavior of bureaucrats in your home country? (300 words)
Niskanen (1971) analyzes the activities of bureaucratic structures from cost and benefit analysis point of view. In this regard, he pays attention to such traditional issues as:
The output and its volume, the costs of its production;
If conditions change, how does it affect costs and output?
With reference to the bureau, this meant a balance between
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It should be noted that this buyer is a group of political officials to whom the bureau delivers public goods. In turn, the bureau also acts as a monopolist (monopoly supplier of its services). There is a situation of a bilateral monopoly, the feature of which is the exchange of promised products for the budget, which is allocated by the bureau. As in the situation of any bilateral monopoly, there is no single equilibrium here. Niskanen’s model speaks of two basic components of the bureau:
(1) For the bureaucrat, the goal is to maximize the budget of his bureau. When maximizing, attention is paid to the conditions of costs and demand, as well as under the constraint that the budget should be equal to or exceed the minimum amount of total costs at an equilibrium
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For example, compare a line-item with a performance format in terms of contributing to citizen understanding about government budgeting and services. (300 words)
According to Lim (2017), there is five budget formats: Lump-sum, Line item, Program, Performance and Zero-based (p. 4). Each of these formats has its advantages and disadvantages.
Line-item budgeting. It is good for government to use this format, because Line-item format remains a popular and useful format, because of its easiness of control and clear reports. To the advantages of line-item possible to attribute strict control over the activities of state organs.
The disadvantages include the complexity of comparison with goals. In this type of budget, it is also difficult to compare results with costs.
Performance format also has clear objectives, i.e. strategic plan, not only activities are measured by this format. Performance format comes from flexible execution. It is only then, when a state agency or organ, has showed a good performance, may request more budget. It has good reporting, benchmarks – when it is necessary to set the target. It has performance data with goals and means, i.e. performance
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