Paper/Speech Details of Conference Program for the 29th NISPAcee Annual Conference Program Overview WG1/WG5 Joint Session (Physical) Author(s) Martina Eckardt Andrássy University Budapest Budapest Hungary Apostolou Janina, Title Participatory Budgeting in Germany: Increasing Transparency in Times of Fiscal Stress File Paper files are available only for conference participants, please login first. Presenter Martina Eckardt Abstract Participatory budgeting (PB) is one of the most popular democratic innovations worldwide to engage citizens at the municipal level. It is a one-year decision-making process in which citi-zens discuss and negotiate the allocation of public revenues and expenditures together with government officials. Social injustice and corruption largely drove the development of the first PB processes, which have their origin in Brazil. A growing number of municipalities has exper-imented with this tool in the last years. However, despite its popularity, empirical evidence is not only scarce, but largely qualitative in nature. There are only few quantitative studies based on larger sample sizes. The goal of this paper is to contribute to the understanding of the reasons why municipalities adopt PB processes. To this end, we empirically test the hypothesis that more indebted munic-ipalities are more likely to implement a PB program. In contrast to the Brazilian experience, not the fight against corruption, but increasing fiscal transparency is one of the main goals in Germany when municipalities implement PB processes. Based on public choice theory, our hypothesis is that this is especially true for municipalities in budgetary crisis. In these cases, policy-makers may use PB processes to prepare constituents for budget cuts. Elected officials confronted with severe budget cuts face a high risk of shouldering the blame for economic decline. This might negatively affect their chances of being re-elected. Thus, they have an in-centive to involve citizens in budgetary decisions, in an effort both to garner sympathy for their positions and to distribute responsibility for the painful cuts mandated in times of finan-cial crisis. Contrary to this, policy makers in affluent cities may want to credit their constitu-ents' economic good fortune toward their own re-election efforts and therefore see no need to involve citizens in budgetary decisions. This paper uses a unique large panel dataset consisting of 2.951 German municipalities for the years 2006-2011. We apply logistic regression to test the hypothesis that especially indebted cities introduce PB processes. We control for a number of characteristics of the municipalities in our dataset regarding their fiscal situation, but also their openness to innovations. In addi-tion, we analyse whether there are still differences between municipalities from Eastern and Western Germany when it comes to adopting PB processes. Results of our econometric analysis show that municipalities with budget deficits are signifi-cantly more likely to introduce PB processes than municipalities that are doing well financial-ly. This finding might explain the evolution of a particular German type of PB processes which asks citizens to propose austerity measures in order to balance the budget as well as the uneven regional distribution of PB processes in Germany.
