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See detailA Principal-Agent Theory Approach to Public Expenditure Management Systems in Developing Countries
Leruth, Luc ULg; Paul, Elisabeth ULg

in OECD Journal on Budgeting (2007), 7(3),

A well-functioning public expenditure management system (PEM) is considered a critical pillar of government efficiency. This article discusses PEM systems in developing countries using an analytical ... [more ▼]

A well-functioning public expenditure management system (PEM) is considered a critical pillar of government efficiency. This article discusses PEM systems in developing countries using an analytical framework based on principal-agent theory. This simple model can be applied to various PEM systems and allows for comparisons between institutional settings. To illustrate this, the authors analyse the benefits derived from the use by the ministry of finance of ex post audits and ex ante controls, and assess their value in terms of their ability to deter cheating. The authors derive a set of possible “control regimes” which can be used by the ministry of finance. [less ▲]

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