Public Choice

, Volume 106, Issue 3–4, pp 243–274 | Cite as

The ``Power of the Purse'' and its Implications for Bureaucratic Policy-Making

  • Michael M. Ting
Article

Abstract

A dilemma of the ``Power of the Purse'' is thatcutting an agency's budget may make a desired policyinfeasible. I examine the implications of thisdilemma with a repeated game in which a bureau choosesunobservable policies after a legislature sets itsbudget. The bureau is work-averse and has its ownpolicy preferences and therefore may cheat, but thelegislature may perform an audit to recover ``slack''funds. A main result is that if the legislaturedesires a higher policy level than the agency, then itfaces a trade-off between ``good'' but wasteful policiesand ``bad'' but efficient ones.

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Copyright information

© Kluwer Academic Publishers 2001

Authors and Affiliations

  • Michael M. Ting
    • 1
  1. 1.Department of Political ScienceUniversity of North CarolinaChapel HillU.S.A

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