The Relationship between Public Expenditures and Services: A Longitudinal Analysis

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Abstract
In summary, we do find that levels of services and expenditures are more closely related across time than they are in cross-sectional studies and that, further, these relationships are functionally specific. At the same time, however, it would appear from these data that the extension of services precedes the expansion of the budget. It may, therefore, be argued that the extension of services can be used as a rational means of expanding the budget available to an agency rather than as a response to the increased availability of funds. This expansion may also be seen as a function of demand creation on the part of the agencies in increasing these services.A second point to be made is the importance of differentiating different categories of service. For those indicators of service that concern output or a service rendered, expenditures and policy are positively related. For those indicators of service that are more related to impacts – or needs – there is a negative relationship – i.e. lower quality associated with higher expenditure. Therefore, we find that the policy-making system of Sweden may have been making policy in relation to important objective changes in its service environment. It further leads us to expect quite different relationships between services and expenditures dependent upon the type of service measure being used.The research site and the measures of services used here are obviously different from those of Sharkansky. However, these findings do speak to the general theoretical point of the connection between public expenditures and services. They demonstrate the need to examine this important research question within a more dynamic framework and in a variety of social and cultural settings. Sharkansky's findings for the American states should be tested, for example, in an examination of the same question for sub-national units in Sweden and other European systems. Through the gradual accretion of these findings, we can elaborate theoretically the linkages between expenditures and policy outputs.