1 - Introduction

Summary

Government budgets can be complex and contentious. Chapter 1 explains the importance of understanding government budgetary behavior and argues for taking a more realistic view of the process. If governments change part of the budget, then they may need to jostle other budgetary pieces as well. We introduce the broad brushstrokes of our theoretical argument that explains when governments have the desire and power to alter budgets, given both their ideological preferences and contextual factors. We acknowledge that spending increases or decreases in some policy areas may require shifts in budgets for other areas, so we use a compositional methodological approach to investigate those changes. In addition, we foreshadow how our theoretical argument also helps to explain the linkages between expenditures, revenues, deficits, and budgetary volatility. To test theories about these linkages we use panel vector autoregressive (pVAR) models. In order to make our findings from the complex models that we use to test our theoretical propositions accessible, we will use a series of graphical interpretation strategies and present technical details of our models and graphs in appendices. Overall, Chapter 1 sets the stage for a book that unravels the brainteaser of government budgetary behavior across countries and years.