The Effect of Political Structure and Budgetary Institutions in Times of Austerity

The paper is a study of how political structure, administrative organization and budgetary institutions influence budgeting and economic management in Danish local government. The period studied is 2008-2013. Due to the financial arrangements in Denmark the effects of the economic crisis were not felt in local government until 2010/11. Therefore it is possible to compare the influence of structure and institutions in times of growth and in times of retrenchment. It is shown that political factors such as the strength of the mayor and the type of administrative organization have a greater influence on budgetary outcomes after austerity set in. In other words: Under austerity political and administrative leadership grows in importance.