Theoretical Model for the Econometric Model Formalization of a Budget Execution of the Decentralized Territorial Collectivities

Abstract

In order to arrive in an econometric model for the analysis of the budget of the communities, the research of the explanatory or theoretical models proposes an analysis of the elements influencing the behavior of the budget of the Municipalities based on the assumption of a trade-off between considerations of autonomous factors of the local sector growth (electoral cycle, behavior of elected officials, inflation…) and short-term considerations of political constraints. The breakdown of these explanatory factors leads us to a global entry, where the explanatory variables of three types: - a macroeconomic variable representative of the economic situation: the rate of inflation, economic growth and rate of fiscal pressure; - budgetary variables representing the financial situation of Local Authorities: total expenditure, total revenue, subsidies and endowments, and time of treasury depletion (where the time between the waiting time for the free funds existing at the General Treasury, for providing an instance for the payment of expenses); - a variable representing the effectiveness of the treasury forecasts and the management of the Local Authority: cash desired in order to standardize the assessment procedures of several Municipalities. In future research, these theoretical or explanatory models will make it possible to prepare an econometric analysis study for a better prediction and budget simulation.

Keywords

• local public administration
• budget of decentralized territorial communities
• public finances
• economic modeling
• numerical simulation