Austerity and budget execution : control versus flexibility

Purpose: How does the era of austerity affect flexibility and control in budget implementation? The execution phase of the budget has remained underexplored in the budgeting literature. Theoretically, a crisis and austerity period may trigger changes in budget execution in one of two key directions: either toward greater control or greater flexibility. This paper seeks to uncover which outcome is more likely. Design/methodology/approach: The authors conducted elite interviews of key officials involved in the budget execution phases in two European countries: Portugal and Austria. Findings: The cases demonstrate that the experience of a fiscal crisis and period of austerity tend to lead to greater control and constrained flexibility in budget execution. Originality/value: The execution phase of the budget process has remained underexplored in the public budgeting literature, and there has been only limited discussion on how the experience of austerity affects it. This empirical study of Portugal and Austria helps to shed light on that question.