The Swedish-Norwegian Experience of Increased Budget Control Due to Hierarchical Budget Reforms in their National Parliaments

Abstract

There has been a wide-ranging discourse among scholars as to whether a hierarchical budget process contributes to increased fiscal discipline. During the 1990s such reforms were introduced in Sweden and Norway. These countries are characterized as being quite equal. However, they faced contrary economic challenges, with an accelerating debt in Sweden contrasting with huge resource revenues in Norway. Nonetheless, they shared equal political challenges by being characterized by minority as well as coalition governments, and even a large proportion of minority, coalition governments. This study confirms that there has been significantly increased fiscal discipline during the parliament’s budget approval process. The outcome has been supported by reforms to the preparation of the budget approval, which have been centralized to the parliaments’ standing committees on finance. The study supports the framework for evaluation of budget processes in von Hagen and Harden (1995). However, there are two significant modifications which stands out as supplements to the framework. First, strong limitations on amendments may be less important under a regime of top-down budgeting than anticipated in their framework. Second, the importance of centralizing the budget preparation in one specific committee, normally the standing committee on finance, may be stronger than anticipated by von Hagen and Harden.