Newly Developed Database of Budget Institutionsin 29 Parliamentary Democracies

Makoto NAKANISHI

Working Paper Series Vol. FY2017-08
October 2017

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Center for Regional Economic Studies, Faculty of Economics

Saga University
1 Honjo-machi, Saga, 840-8502 JAPANNewly Developed Database of Budget Institutionsin 29 Parliamentary Democracies ¶Makoto NAKANISHI*
Faculty of Economics, Saga University

Abstract
In this paper we developed a new database of budget institutions in parliamentary democracies. It ismainly based on the database of Fabrizio & Mody (2010) which integrates data on both West and East
European countries, mostly according to the classification of budget institutions adopted traditionally by vonHagen and Hallerberg (and other related researchers). Data on three non European Westminster countries(Australia, Canada and New Zealand) and Japan, obtained through the author’s own qualitative research wasadded.

Key Words: Budget Institutions, Parliamentary Democracies¶ This study could not have been realized without the database of Fabrizio and Mody, which integrates previous studies of East

European countries of Gleich and Yläoutinen, and refurnishes pioneering works of von Hagen, Hallerberg and others. The
author owes a lot to these previous studies in terms of databases of budget institutions. The author is also grateful to theinterviewees from the three Westminster countries for their cooperation during data gathering. The preliminary phase of thisresearch was partly supported by the Japan Society for the Promotion of Science under the grant number (B) 23310104, andthe author would like to thank the organization.
* corresponding to: kotmurka@cc.saga-u.ac.jp

11. Introduction
At present, public finance of most of industrialized countries has suffered excessive
deterioration. The situation is the most serious in the case of Japan, whose gross general
government debt reaches 234 % of its GDP in 2015. That of Greece reaches 181.6, while thatof Italy 157.3, and that of Portugal scores 149.2. Such disastrous fiscal performance ofcontemporary economies has certainly been triggered by global economic crisis of 2008.
However, already before the crisis, fiscal performance of modern capitalist economies wasvaried greatly. In 2005, the same kind of indicator was 173.7 for Japan, 117.4 for Italy, 113.3
for Greece, yet it was only 51.1 for United Kingdom, and 36.7 for Australia. The same score in2005 of Germany was 70.1, although this is superior to one of the limiting criteria of Maastricht
treaty where a value of 60 % per GDP is mentioned. The latter institutional numerical target, or
limitation has, nevertheless, supposedly contributed to constrain fiscal profligacy in EU
member countries, as most of these countries have been limiting their government debt using
this criterion even though many of them have surpassed it more or less.
This might mean that the numerical target concerning public finance is essential and that
it is the main factor for past successful cases of fiscal management in modern economies. Thisview was adopted when the EU members agreed on the Maastricht Treaty, when 3 % deficit per
GDP and 60 % debt were the key criteria which were supposed to be able to constrain the fiscal
mismanagement of member countries (so called “Convergence Criteria”). However, not all
fiscal specialists agreed with this view and some of them insisted on the importance of“procedural rules” as compared to “numerical rules” of public finance, asserting that the latteris ineffective in fiscal management or puts excessively inconvenient constraint on economic
policy management, while the former is much more effective to achieve a sound fiscal
performance and is costless in terms of leaving sufficient room for stabilization policy (Alesina& Perotti (1999)).
This point or contrast of the two different approaches toward a sound fiscal management
has a lot to do with the so-called “institutional” factor of the modern political economy.
Numerical fiscal target has been regarded as an important limiting factor on public finance since
the argument put forward in “Constitutional Political Economy” of James Buchanan and related
researchers (Buchanan & Tullock (1962)). Gaining a hint from balanced budget rules stipulated
in constitutions of American States, they intended to generalize such rules to the Federal
Government (Buchanan & Wagner (1977)). Although we can interpret EU fiscal rules as one ofsuch numerical fiscal target, many European researchers were skeptical to this numericalapproach, while they were likely to support “procedural rules” rather than “numerical rules”(Alesina & Perotti (1999)). von Hagen was the first to organize such procedural fiscal rules in
his database (von Hagen (1992)), and his database has been successively improved since thenby him and his collaborators (including Mark Hallerberg), and these rules have been largely
used in the studies of budget institutions (from von Hagen (1992) to Hallerberg et al. (2009)).
Although the studies of von Hagen and Hallerberg, and other related researchers, as well2

as the followers who have been using the same database, have contributed a lot to thedevelopment of the political economy of governmental budget, such database has crucial
deficiencies, which need to be overcome. First of all, their database is constructed on the sample
of 15 EU countries. Thus, important countries are missing in the sample. One category of suchcountries is the “Westminster” group of countries, except the United Kingdom. Typically,
Australia, Canada, and New Zealand compose such group of countries and at the same timethey are also important to characterize modern governmental budgeting practices. These
countries are characterized by their high quality of fiscal planning function, numerical targets,and strong emphasis on executive power of Senior Ministers (Prime Minister and Minister ofFinance, among others) in budgetary decision making. They have also made efforts to simplify
budgeting procedure inside administration, so that “letting managers manage” tradition has
become firmly established. Such characteristics can be regarded as “Westminster-type” newtradition of governmental budgeting, and the same characteristics can be found in budget
practice of the United Kingdom. However, only UK has been represented in the sample of vonHagen and thus “Westminster-type” budgeting style has been represented too narrowly in thesample, which could have influenced the conclusion and insights drawn from the past analyses,
which have used the same “von Hagen” sample.
The second group, which has not been represented in the traditional sample but isimportant, is the group of East European countries. Characterized by the complex ethnicity, andstill unstable political culture, most of the East European countries have coalition governments.
However, political institutions, including budgetary procedure, are yet immature. Traditional
sample of West European countries has those of coalition governments with relatively maturepolitical and budgetary institutions. Thus traditional sample has overrepresented relatively
mature democracies while underrepresenting immature ones. Including East European
countries into the sample of budgetary database is important to achieve more general
representation of countries with coalition governments with or without matured institutions,and this has been just recently taken into account by some researchers (Fabrizio & Mody (2006,2010), Yläoutinen (2005), Gleich (2003)).
Finally, the “European” sample so far adopted has also been too narrow as it did notcontain Japan, a country with the most serious fiscal problem among industrialized countries,
which nevertheless has substantial influence on world economy and society. Japan has also been
known by some few specialists to have extremely poor budget institutions (von Hagen (2006)).
Thus, not including Japan in the sample of budgetary institutions means losing an important
explanatory power of budget institutions on fiscal and economic variables. However, we have
not yet come across a multicountry sample of budget institutions that would include Japan. This
point still remains to be resolved, probably due to geographical (non) proximity of researchers.
The intention of this paper is to suggest a new database of budget institutions integrating
non European Westminster countries, East European countries, as well as Japan. This is almost3the complete sample of representative parliamentary democracies. While excluding presidential
democracies from our new sample may be unfortunate if we wish to gather most of industrial
countries in our sample, this choice was inevitable as our sample was constrained by data
availability, and we also recognize that this choice is relevant because in presidential
democracies the government and the parliament have different functions from the point of viewof parliamentary democracies, mostly due to their “strict” application of “separation of power”
principle. Mixing two sorts of samples in one would undermine the coherence of data. We hopethat with the help this new database we can discover the hidden mechanism of budget
institutions that is probably influencing public finance and national economy. We also hope that
we can illuminate political functions of parliaments through budgetary processes. For theseobjectives, however, we must disclose all details pertaining to creation of such new database ofbudgetary institutions.
2. Making of New Database of Budget Institutions
We started creating our new database by mostly adopting the results of research by
Fabrizio & Mody (2010). They made budgetary indices of East European countries comparablewith those of West European countries (Fabrizio & Mody (2006)). Not all but many indices of
the traditional database (of von Hagen and Hallerberg) are still used in the database of Fabrizio& Mody (2006, 2010).
We then supplemented their database by new indices of four countries, that is, three nonEuropean Westminster countries and Japan. These indices were obtained by our own qualitative
research. Besides, we supplemented our new database by employing French and Irish indicesfrom the traditional database of von Hagen and Hallerberg.
The starting point of our new database was the work of Fabrizio & Mody (2006, 2010).
Their database integrates the data of East European countries, using such various sources as“Gleich (2003), Yläoutinen (2004), IMF fiscal ROSC reports, and direct information from theauthorities” (Fabrizio & Mody (2006)). They relied on documentary sources and directlyinterviewed government authorities when it was necessary, to construct their East European
new database. The same is true with their version of budgetary database for the entire European.
“Expanding the data to a broader set of European countries was made possible by the reportingin Hallerberg, Strauch, and von Hagen (2007)1. To confirm and update the status of budgetary
practices, we have consulted annual fiscal budget laws and the Fiscal Transparency Module ofthe International Monetary Fund’s Reports on the Observance of Standards and Codes (ROSC).
Where ambiguities persisted, we were in direct contact with the country authorities” (Fabrizio& Mody (2010)).

(This is the author’s note) The same paper with Hallerberg et al. (2006). Hallerberg et al. (2006) shows in
the appendix a detailed information about the indices of budget institutions for each country, while Hallerberg
et al. (2007) does not.
41

Basically, they made their database relying on documentary research and directinterviewing of governmental authorities. However, the final judgment of scores evidently
resides on their own expert knowledge. This is not the self reporting of governments, as is foundin the case of OECD database (International Budget Practices and Procedures Database). The
same is true with the original von Hagen indices. “The data for the following characterizationof the national budgeting procedures in the EC are based on an assessment of information on
national procedures provided by the European Commission.” (von Hagen (1992), p.38) “Thefollowing tables compress and summarize the assessment of information on national budgeting
procedures and are prepared by the present author. They do not reflect the judgment nor theinterpretation of the European Commission.” (von Hagen (1992), p.59) von Hagen gatheredqualitative accounts from the European Commission, or Member States (von Hagen (1992),
p.59). He, however, summarizes and reorganizes various sources, and his subjectivity as expert
mixes this summary and reorganization. The advantage of this approach is in a possibility toknow the actual governmental behavior rather than codified rules, but it is achieved “at theexpense of subjectivity in the assessment.” (von Hagen (1992), p.38)
Thus, making a database of governmental budget procedures inherently necessitatessome expert knowledge of governmental officers and researchers themselves, which may besubjective. Our own supplement of data concerning 3 Westminster countries and Japan, as well
as minor adjustment of pre-established indices of budgetary indices would follow a similar
procedure and implies our expert, but somewhat subjective scoring.
2.1. Using the Database of Fabrizio & Mody(2010)
Before Fabrizio & Mody (2010), Fabrizio & Mody (2006) is used to be a pioneering
empirical study which prepared and reorganized the budgetary indices of East European
countries. This was achieved by their own qualitative study, but they also referred to Gleich(2003) and Yläoutinen (2005). Gleich (2003) prepared the budgetary indices of 10 East
European countries using their own qualitative research based on legal documents andquestionnaire responses. The items of budgetary indices are almost similar to those of vonHagen database, but not completely the same. Yläoutinen (2005) also developed the budgetarydatabase of East European budget institutions using her own questionnaire survey. The databaseof Fabrizio & Mody (2006) is a synthesis of these studies with their own qualitative research.
Not all indices of Fabrizio & Mody (2006) are employed by Fabrizio & Mody (2010) (allEuropean version of a sample, integrating East and West European countries) probably due tothe data availability (of West European countries). Following the classification of Fabrizio &Mody (2010), we can refer to their evaluation of budgetary institutions in East European
countries, as is shown in the following table.
Table 1: Budgetary indices of East European Countries
N1

N2

N3

P1

P2

P3
5

I1

I2

I3

I4

Bulgaria

0

3

4

0

0

4

〜97

0
Czech

0

3

0
4

4

0

4

4

1.28

4

4

1.28

1.33

0

〜00

4

0〜97
Estonia

3

3

4〜00
4

4

0

4

4

1.92

1.67

4

0〜02
Hungary

0

3

4

0

0

0

0

0.64

1.33

0

Latvia

3

3

2

0

0

4

4

1.92

2.67

4

Lithuania

0

1

4

4

0

0

4

1.28

1.33

4

〜98

0
Poland3

1〜97

Romania

4
4

〜98

0

0

0

3

4

〜00

0

4

4

1.28

2.67

4

0

4

4

1.28

4

0

〜97

0
4

1〜02

4
0〜02

Slovakia

0

1

2

0

0

4

0

1.28

1.33

0

Slovenia

0

3

4

4

0

4

0

1.28

2.67

0

Source: Fabrizio & Mody (2010)

Their budgetary scores assimilate those of von Hagen and Hallerberg. However, thedatabase of von Hagen and Hallerberg has been evolving for over three decades since theoriginal work of von Hagen (1992). Fabrizio & Mody (2010) seems to have referred to theversion of Hallerberg (2006) as we compare the scores of West European countries (Hallerberg
et al. (2009) has further adjusted their scores after the version of Hallerberg (2006)). The
classification of budgetary indices, adopted in Fabrizio & Mody (2010), based on budget
process argument of Wildavsky (1975), preparation, voting, and implementation, is shown in
the following list2.
Table 2: List of Budgetary Indices (Fabrizio & Mody (2010))
No.

Score

N1

Symptoms
General constraint

4.00

Spending and debt as share of GDP

3.00

Spending as share of GDP or golden rule or limit on public borrowing

2.00

Balance and debt as share of GDP

1.00

Balance as share of GDP

The indices of “quality of budget institutions” are classified, in Fabrizio & Mody (2010), into “Preparation
Stage” (1 to 3), “Authorization Stage” (4 to 6), and “Implementaion Stage” (7 to 10). Here we rename thesethree stages, N1 to N3, P1 to P3, and I1 to I4. “N” is taken from “Negotiation,” “P” is taken from “Parliament,”
and “I” is taken from “Implementation”.
6
2

0.00
N2

None
Agenda setting

4.00

MF or PM determines budget parameters to be observed by spending ministers MF

3.00

proposes nudget norms to be voted on by cabinet

2.00

Cabinet decides on budget norms first

1.00

MF or cabinet collects bids subject to the pre-agreed guidelines

0.00

MF or cabinet collects bids from spending ministers

N3

Structure of negotiations
4.00

Finance ministry holds bilateral negotiations with each spending ministry Finance2.00

ministry holds multilateral negotiations.

0.00

All cabinet members are involved in the negotiations at the same time

P1

Parliamentary amendments of the budget
4.00

Are not allowed, or required to be offsetting

0.00

Do not required to be offsetting

P2

Sequence of votes
4.00

Initial vote on total budget size or aggregates

0.00

Final vote on budget size or aggregates
Relative power of the executive vis-à-vis the parliament; can cause fall of government?

P3

Yes
4.00

No

0.00
I1

Changes in the budget law during execution
4.00

Only new budgetary law to be passed under the same regulations as the ordinary budget
Requires parliament consent

2.00

At total or large discretion of government

0.00
I2

Transfers of expenditures between chapters (i.e. ministries' budgets)
4.00

Not allowed

3.20

Only possible within departments with MF consent

2.56

Only possible within departments

1.92

Require approval of parliament

1.28

Only if provided for in initial budget or with MF approval

0.64

Limited

0.00

Unlimited

I3

Carryover of unused funds to next fiscal year
4.00

Not permitted

2.67

Limited and required authorization by the MF or parliament

1.33

Limited
7

0.00
I4

Unlimited
Procedure to react to a deterioration of the budget deficit (due to unforeseen revenue
shortfalls or expenditure increase)

4.00

MF can block expenditures

0.00

MF cannot block expenditures

Source: Fabrizio & Mody (2010)

We would need to make some remarks on this list because some of indices adopted
traditionally in the sample of von Hagen and Hallerberg have been dropped. From all the indicesof Hallerberg et al. (2009), those of “Fiscal Targets” and those of “Informativeness of Budget
Draft” have been dropped completely. For the indices of “Negotiations in Cabinet”, “Budget
Norms” index has been dropped. For the indices of “Parliamentary Stage”, the indices ofamendments are integrated into one of an inquiry whether offsetting amendments is required.
One time vote on total expenditure is not asked in the indices of Fabrizio & Mody (2010). For
the indices of “Execution”, “Cash Limits” and “Disbursement Approval” are not asked in theindices of Fabrizio & Mody (2010). Narrowing of focus shown in such selective use ofbudgetary indices can be due to the data availability of East European countries (judging fromthe indices adopted in Fabrizio & Mody (2006).
Table 3: List of Budgetary Indices (Hallerberg et al. (2009))(Fiscal Targets)
Multiannual Target, Planning Horizon, Nature of Plan, Degree of Commitment(Negotiations in Cabinet)
General Constraint*, Agenda Setting*, Budget Norms, Structure of Negotiations*(Parliamentary Stage)
Amendments Limited, Amendments Offsetting*, Amendments Cause Fall*, Expenditures Pass in One
Vote, Global Vote on Total Budget*(Execution)
MF Block*, Cash Limits, Disbursement Approval, Transfers*, Budget Changes*, Carryover Provisions*(Informativeness of the Budget Draft)
Special Funds Included, Budget in One Document, Transparancy Assessment, Link to National
Accounts, Government Loans Included
Source: Hallerberg et al. (2009). Asterisk is put on the indices adopted in Fabrizio & Mody (2010)

Fabrizio & Mody (2010) supplemented East European database with West European
indices, which almost follows the classification of budgetary indices used by von Hagen andHallerberg. As it was already mentioned, not all indices are adopted due to problems with data
availability. What is remarkable here, even with the adopted indices, is that their evaluation of8budget institutions in West European countries is not the same as that of von Hagen andHallerberg. This reflects their updated and latest survey of budget institutions. The following
table shows the indices adopted by Fabrizio & Mody (2010) with respect to West European
countries.
Table 4: Budgetary indices of West European Countries
Austria

N1

N2

N3

P1

P2

P3

I1

I2

2

4

4

0

2

0

2

4

〜97

Belgium

0

2

4

2
〜92

Denmark

Finland

〜97

1.28
2

〜92

〜92

4

0

1

0

0

4

4

2

0

3〜97

4〜97

2

2

2

2

1〜97

4〜97

4

4

4

4
〜02

0

4

0

〜92

4

2.56

I4

2.67

4

0

4

〜97

0
〜92

I3

〜92

0〜92

4

0

2

0

0

4

0〜97

4〜97

4〜97

1.92〜97

0

0

4

0

4

4

0

0

4

4

0

0.64

2.67

4

2〜97

1.28〜97

0

1.28

0

4

0〜97

1〜95
Germany

Greece

3

2
〜97

Italy

〜97

〜97

0〜97
4

0

1

0

0

2

1

4

0

〜00

〜96

4

2

4

0

4

4
〜97

0

4
〜97

4
〜96

0

0

〜97

4
〜96

0

〜97

4
0

0

1.33

〜96

4

〜01

0

0〜96

4

4

1.33

0

2〜95
Luxembourg

4

4

3〜03
Netherlands

3

Portugal

4

4

4

0〜02
2

〜97

0

4

0

0〜97
4

4

0

1.92

〜97

1

3

2

2

〜94

0
2

〜97

0

0

4

〜97

1

4

0
4

0

1.33

〜97

2.67

4
〜

0〜97

97

Spain

3

4

4

0

4

0

0

1.28

4
1.33

0
〜

93

Sweden

3

3

4

0〜96

0〜96

0

4

4

4

0〜96

4

2.67

0

0〜96

1.33 〜
96

UK

4

3

4

4

4

〜97

2

4

4

1.28
1.92

9

0
〜97

1.33

4
〜

0〜97

97

Source: Fabrizio & Mody (2010)

Some scores adopted in the database of Fabrizio & Mody (2010) (Hallerberg et al. (2006) is
the most comparable version) and those adopted in the database of von Hagen and Hallerberg aredifferent. These changes, judging from documentary research, seems reasonable to the eyes of
the author of this paper. The only thing that we corrected was I2 of United Kingdom. Originallyin Fabrizio & Mody (2010) it is 2.56, while we changed it to 1.28, because budgetary transfer
was liberalized rather than restricted.
2.2. Newly introduced indices of 4 added countries (plus 2 reintegrated countries)
In this paper, the database of Fabrizio & Mody (2010) is supplemented by the author’s
original research. The author developed the scores of 3 non European Westminster countries
and of Japan. Simultaneously, the database of Fabrizio & Mody (2010) is supplemented byadding two omitted European countries (France and Ireland), using the database of von Hagen
and Hallerberg. The following is the table which shows the newly developed scores of budget
institutions of these 4 plus 2 countries.
Table 5: Budgetary indices of 4 added countries (plus 2 reintegrated countries)
Australia

N1

N2

N3

P1

P2

P3

I1

I2

2

1

2

0

0

4

4

1.28

〜97

〜82

(85-)

0

Canada

2

4

4

0〜94

1〜94

0〜94

NZ

3

2

2

0

(85-)

0〜93

1〜93

0〜88

4〜95

Japan

0

2

0

0

0

4

0

France

4

4

4

4

4

4

Ireland

0

4

4

2

2〜92

1〜92

2〜92

2.56
4

4

0

4

0

4

4

〜85

I3

I4

1.33

0

〜85

4

1.28

1.33

3.2〜92

4〜86

1.92

4

0

3.2

2.67

0

0

1.28

1.33

4

4〜97

1.92〜05

4

1.28

1.33

4

3.2〜92

4〜92

0〜92

4

0

3.2〜8804

Source: The author’s own qualitative research which supplemented the database of Fabrizio & Mody (2010).
As for Japan, von Hagen (2006) was also referred, while for France and Ireland, the scores from Hallerberg
et al. (2006) are used (French I2 score was modified).

In this table, three Westminster countries are scored according to the author’s own

10qualitative research3. Japan is scored using von Hagen (2006), but its data are modified using
local information (including interviewing the mandarins of Japanese Ministry of Finance about
the detail of budgetary process by telephone). The data of France and Ireland are omitted from
Fabrizio & Mody (2010). The scores of these two countries are reintroduced from the databaseof von Hagen, with some minor modifications. In the following subsections, we are going to
explain the background of scoring shown in the table 2 country by country.
2.2.1. Australia
Australia’s N1 is scored as zero until 1997, while that is scored as two since then. HereFRD is referenced. The data before 1985 is missing. Some fiscal rules were recorded (Wanna
et al. (2001), p.124) but they can be interpretable as very rudimentary.
N2 is scored as one, since agenda setting function has been nonexistent, but referred in
the Expenditure Review Committee (Blöndal (2008) and the author’s interview held in2013(see note 3).
N3 is scored as two. There has been a tradition of collective decision making between
Treasury, Finance and Cabinet Office, but not the entire cabinet. This tradition has been
established since ERC was introduced. Although ERC was introduced in 1975, it seems to havebecome effective from Hawke Cabinet (1983).
P1 is zero since the Senate’s amendment power is authorized. There is no system ofsequence of votes (P2). P3 conforms to the Westminster tradition (4).
I1 has been scored between 4 or zero in the database of von Hagen, or that of Fabrizio &Mody (2010). The lower score is found among the countries, which have increased theoccasions of supplementary budget. There is no such country in Westminster countries (I1=0).
“One-Line Budget” has been implemented since 1986 (I2=1.33). Before, the transfer
between votes had been virtually banned (I2=2.56)4. Carry-forward has been admitted since1986 (Wanna et al. (2001) “Running Cost Agreements” p.203). Since then I3 has been 1.33.
There is no such rule as MF block (OECD survey (Lieneart & Jung (2004)).
Data availability is limited before 1985.
2.2.2. Canada
Canada has established fiscal rule since Chrétien government (N1=2). We infer that thismeans that the Federal Spending Control Act of Mulrouney government was not effective.
The funding decision has been made between the PM and the Minister of Finance since3

Our qualitative research is mainly documentary one, but we supplement our documentary research byinterviewing government agents of these three countries (July-August 2012 for Australia, September 2012
for Canada, and March 2013 for New Zealand).
4 In Australia the Audit Act (section 37) similarly empowers departments to shift funds from one vote toanother if the Treasury consents. But the Public Accounts Committee has so often been critical ofunderspending that the Treasury has not given that consent for a long time and that section of the Act has
virtually become a dead letter. (Weller & Cutt (1976), p.63)
11

Chrestien government5 (N2=4).
N3 is 4 since in Canadian government, budgetary decision making is made only between
the PM and the Minister of Finance. It is from 1995 similarly with N1 and N2.
OECD legal framework (Lienart & Jung (2004)) tells us that in Canada, P1 and P3 are 4.
There is no such institution as sequence of votes in Canada (P2).
I1 is four because of the same reason with Australia. I2 is 1.28 since 1993 since“Operating Budget” was introduced in 1993 (1993 Office of Auditor General Report, chapter
6). Historically, it is 3.28 since only transfer within votes was permitted and there was a severe“allotment control” made by TBS6. I3 is 1.33 since 1987 as is clear in “Carry-Forward of CapitalFunds - TB Circular 1987-53”. There is no such rule as MF block (OECD survey).
2.2.3. New Zealand
The 1994 fiscal responsibility act introduced a fiscal rule based on “golden rule” (N1=3).
The same act introduced BPS (N2=2). Before this act, there had been similar procedures but
ineffective7. Budgetary decision making is characterized as that made by Senior ministers or“Budget ministers” (N3=2)8. Such collective decision making has been a long tradition, but it
was virtually established in 19899.
Boston & Church (2002) tell us that there was no amendment admitted until 1996. Afterthat it has been allowed (OECD legal framework) but with various restrictions including vetopower (P1 is changed from 4 to zero since 1996). No sequence of votes similarly as with twoother Westminster countries (P2=0). P3 is 4 because it is Westminster tradition.
I1 is 4 as is in other two Westminster countries. For I2, the transfer between votes was

Treasury Board of Canada, “Expenditure management system of the government of Canada” (1995)“The power (for virement, i.e. transfer of money within a vote) was made statutory in 1931, and continued
in FAA 1951 with one qualification: s.29 requires the various branches of the executive to submit to the TB,
in the form detailed in the estimates submitted to Parliament for such appropriation or item, or in such otherform as the Board may prescribe, and when approved by the Board the allotments shall not be varied oramended without the approval of the Board (p.249, Ward (1962)).”
7 “The guidelines did not establish control at the overall net fiscal impact level” (p.27, Nethercote, Galligan& Walsh (1993)).
8 “Another was the establishment of a Cabinet Expenditure Committee…in formulating 1993 budget, asmaller group of 'gate-keeping' ministers (including the Finance Minister, Prime Minister and Deputy Prime
Minister) made initial decisions on which new initiatives would proceed for consideration by cabinet
committee.” (Boston & Church (2002))
9“In 1989, under the prime ministership of Geoffrey Palmer, the Expenditure Review Committee wasformed from an ad hoc committee to give greater formal structure to the budget process.” (McLeay (1995),
p98)“Between 1985 and 1989, a committee outside the formal process existed to push certain items onto thecabinet agenda known as the Priorities Committee, it held weekly meetings and was serviced by an officialfrom the Prime Minister's Office”(Boston(1990), p.72).
“Roger Douglas, as Finance Minister, also tended to operate outside formal channels. He would often decide
on a preferred policy in discussion with selected officials. He would then get his Associate Ministers David
Caygill and Richard Prebble onside, before going to Deputy Prime Minister Geofrrey Palmer and Prime
Minister David Lange.” (idem, p.71)
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prohibited and that within vote was also virtually prohibited10. 1989 Public Finance Act allowed
the transfer between votes (I2 =1.92). Carryover is still prohibited (I3=4). There is no suchinstitution as MF block (I4=0).
Data availability is limited before 1985.
2.2.4. JapanFor Japan, we can refer to von Hagen (2005). However, some scores seem to bereadjusted from the point of view of a local (Japanese) researcher. N2 is readjusted from 2 to 1.
In other scoring of von Hagen and Hallerberg, N2=2 means setting the total limit sum to theentire budget. Although “weak agenda setting power” (von Hagen (2005)) is correct, the realityof such weakness in Japan is closer to one rather than to two. I1 is set to 2 in von Hagen (2006).
However, the notorious, frequent use of supplementary budgets is well known here in Japan. I1
is evidently zero rather than 2. In von Hagen (2006), I2 seems to be 4, but it is to be readjustedwith the general level of scoring in Hallerberg et al. (2006). That should be 3.28 rather than 4.
Finally, there is no such institution as MF block (I4=0). It was also confirmed via a telephone
call with a Japanese MF agent.
2.2.5. France and Ireland
In Fabrizio & Mody (2010), there is no data about France and Ireland. However, similar
indices have been developed by von Hagen and Hallerberg. We reuse Hallerberg et al. (2006)
to supplement the database of Fabrizio & Mody (2010). However, LOLF 11 reform has
liberalized budgetary transfer, and therefore we changed I2 score from 1.92 to 1.28 in 2006.
3. Concluding Remarks
Traditional database used for research of budget institutions is that containing data of 15
European countries developed by von Hagen and Hallerberg (von Hagen (1992), Haller- berg
(2003), Hallerberg, Strauch and von Hagen (2006, 2009)). However, this database is “tooEuropean”, or even too ”West European” and excludes many important parliamentarydemocracies. Another database of budget institutions is that of Fabrizio and Mody (2010),
which integrates data related to East European countries.
Adopting the database of Fabrizio and Mody (2010) as our starting point, we intended tofurther enlarge sample countries in two directions. One was to integrate three additional
Westminster countries (Australia, Canada, and New Zealand). Westminster countries have aparticular budgeting style, characterized by its advanced fiscal planning functions, as well as
10That was possible if the value was within the scope of 2 and 1/2 %. Over that threshold, a detailed reportto the parliament was required (NZ Treasury note).
11 Loi Organique relative aux Lois de Finances. French budgetary reform with total application in 2006,
which liberalized internal budgetary management including budgetary transfer, and introduced a kind of
performance / program budget.
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more delegated and decentralized budgetary management than in continental Europe.
Westminster style budgetary management is, however, underrepresented in traditional
databases, since only the United Kingdom is included in the previous databases. We also
included Japan, which has the most seriously flawed fiscal performance among developed
countries in terms of the debt outstanding per GDP.
We suspect that the absence of the data for these countries is the cause of somewhat
biased results of the previous studies. In so called ”delegation states” of von Hagen’sclassification12, procedural rules, rather than fiscal planning functions, have been emphasized,
but such classification might be a result of underrepresentation of Westminster countries.
Westminster style of budgeting would imply a dependence on fiscal planning function rather
than detailed budget control including implementation phase (which is relatively loose now inthese countries). But such characteristics are contrary to the ideal of a “delegation state”
described by von Hagen and Hallerberg. Japan is also characterized by its extremely poor
indices of budget institutions, thus omitting this country would blur the results of empiricalstudies. Including East European countries is also important, because many of them havecoalition governments and they could be characterized as “commitment (contract) states”
according to Hallerberg and von Hagen, but their fiscal planning function is relatively poor andimmature compared to typical contract states such as Nordic countries. All the above
considerations could cast a new light on the traditional dichotomy of “delegation” and “contract”
states, currently adopted by von Hagen and Hallerberg.
On the contrary, we have sufficient reasons to stay inside parliamentary democracies as
most of discussions related to coalition government and budget institutions are applicable only
to parliamentary democracies, and the situation is rather different in presidential democracies.
We adopt a new sample of 29 parliamentary democracies including Euro area countries, Central
and East European countries, three Westminster countries (Australia, Canada, and New
Zealand), and Japan. We believe that this sample covers most of industrialized parliamentarydemocracies, with the exception (due to data availability problems) of Norway, Switzerland,and other similar countries.
This database is developed to be used in new empirical studies on budget institutions,and to open new opportunities of research based on a relatively larger sample of representative
parliamentary democracies13.
12

von Hagen and Hallerberg, and other related researchers have focused on the classification of countries interms of budget institutions into delegation states and contract (commitment) states. The former typicallyhave single party governments often under the majority electoral system, while the latter typically havecoalition governments often under the proportional representation electoral system. Budget institutions are
effective in both cases, but different aspects of budget institutions prove to be important for each of these twoclasses of states.
13 In real use of this new database, a judgment is needed about the time horizon adopted for empirical study.
We assume that there is no virtually decisive change until 2010 from the change of scores shown in the tablesin this paper. We also assume that we can use our indices since 1970 (1985 for Australia and New Zealand
due to data availability problem) as we don’t find any incidence to make changes on budgetary scores. Of
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