Ineffective fiscal rules? The effect of public sector accounting standards on budgets, efficiency, and accountability

  • Florian Dorn
  • Stefanie GaeblerEmail author
  • Felix Roesel


International organizations have encouraged national governments to switch from traditional cash-based to business-like accrual accounting, on the presumption that long-run benefits may outweigh substantial implementation and operating costs. We use a quasi-experimental setting to evaluate whether changing public sector accounting standards is justified. Some local governments in the German federal state of Bavaria introduced accrual accounting while others retained cash-based accounting. Difference-in-differences and event-study results do not show that (capital) expenditures, public debt, voter turnout, or government efficiency developed differently after changes in accounting standards. Operating costs of administration, however, increase under accrual accounting.


Fiscal rules Public accounting Budget transparency Sustainability Government efficiency Accountability Local government 

JEL Classification

D02 D73 H72 H83 



We thank István Ábel, Stephan Brand, Silvia Coretti, Gunther Friedl, Carolin Fritzsche, Arye L. Hillman, Christian Hofmann, Florian Keppeler, Niklas Potrafke, Christian Raffer, William F. Shughart II, Johannes Steinbrecher, Jan-Egbert Sturm, three anonymous referees, and the participants of the Annual Yearbook of Public Finances Workshop in Leipzig (2018), the Meeting of the European Public Choice Society (EPCS) in Jerusalem (2019), the Meeting of the Doctoral conference of the Hanns-Seidel-Foundation in the Banz monastery (2019), and the 28th Silvaplana Workshop of Political Economy in Pontresina (2019) for helpful comments. We are grateful for helpful data support by the State Statistical Office of Bavaria. Florian Dorn gratefully acknowledges funding by the Hanns-Seidel-Foundation, and Felix Roesel gratefully acknowledges funding by the German Research Foundation (DFG Grant Number 400857762).

Supplementary material

11127_2019_755_MOESM1_ESM.pdf (175 kb)
Supplementary material 1 (pdf 174 KB)


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Authors and Affiliations

  1. 1.ifo Institute - Leibniz Institute for Economic Research at the University of MunichUniversity of MunichMunichGermany
  2. 2.ifo Institute - Leibniz Institute for Economic Research at the University of Munich, Dresden BranchTechnische Universität DresdenDresdenGermany

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