Allocation of Central Government Budgets Over City Regions

Abstract

The paper states the pressing need for a more analytical approach to the allocation of Central Government budgets and to budget forecasts for local areas. In many cases Central Government is unable to deal with individual projects of expenditure or investment and a strict optimisation at this micro level is impracticable. In these circumstances allocation must be based on broad and more aggregative indices, current and predicted.

The paper offers a number of distinctions and certain allocation methods are discussed with simple illustrations. It is argued that methods have to approximate to micro optimisation at one extreme and macro economic optimisation at the other. The paper calls for further analysis on the interrelationships between methods.