| Article ID: | iaor19992167 |
| Country: | United States |
| Volume: | 10 |
| Issue: | 3 |
| Start Page Number: | 354 |
| End Page Number: | 374 |
| Publication Date: | Jan 1998 |
| Journal: | Journal of Public Budgeting, Accounting and Financial Management |
| Authors: | Robinson Marc |
| Keywords: | government, decision: studies |
The application of capital charges to core government agencies (those which produce tax-financed outputs) is one of a number of steps being taken by certain governments as part of a broader strategy to place such agencies upon a market footing. Capital charging involves the levying upon these agencies of charges designed to reflect the cost of the capital which they employ. This article presents a theoretical evaluation of capital charging which identifies the manner in which imperfect information, uncertainty and the expenditure control imperative undermine the system's raison d'être.