This paper presents data on the size and growth of general government expenditures and receipts relative to GDP in OECD countries over the 1960–81 period. A feature of these trends is the widespread appearance of budget deficits in the mid-seventies, following the sharp increase in government expenditures relative to GDP in the two years immediately after the first oil shock in 1973. Having presented these data, the paper tests several hypotheses relating the size and growth of government to macroeconomic performance using an international cross-section framework. The economic performance indicators used are the rate of economic growth, the rate of consumer price inflation and private sector employment growth. Overall, the results provide little evidence that government size and growth have been detrimental to economic performance, particularly in the period since 1975, although an inverse relation existed in the sixties between government size and economic growth.

Nearly every OECD country has faced a scissors crisis in public finance since the worldwide depression of the mid-1970s; in slow growth economies public spending has been rising faster than tax revenues. In response, a great variety of methods have been employed to control public spending. Governments have sought to: impose global ceilings on spending; modify indexation rules; decentralize decremental decisions among government agencies; improve cash flow management; devise balanced packages; introduce new constitutional rules; provide incentives for retrenchment; and privatize public sector activities. Efforts to impose cuts in spending have been directed at the bureaucracy; transfer payments; subsidies; local and regional government; and quangos. The conclusion emphasizes that retrenchment policy presupposes a shift in the balance of power between guardians and spenders.

The paper considers the size and the implications of the errors made by the British Treasury in forecasting the budget over the period 1951–84. On average the Treasury underestimated the public sector fiscal deficit by 0.5 per cent of GDP; this is about half the average amount by which Chancellors attempted to change aggregate demand by means of their budgets. The general pattern was for tax revenue to be under-predicted, but for public expenditure to be under-predicted by even more. The government's fiscal deficit and thus the reflationary effect of government policy was therefore greater than the Treasury intended.

A decomposition exercise carried out on the Treasury's own model for the fiscal year 1980/81 suggests that only about half of this error is due to errors in the specification of the model; the other half is due to errors in data estimation and in forecasting exogenous variables. Hence, the scope for improving forecasts by improvements to the model is limited. The paper considers three alternative methods by which forecasts could be improved: the application of realisation functions relating forecast to actual values; more frequent budgeting; and an attempt to derive more tax revenue from those categories (such as excise duties on alcohol, petrol and tobacco) whose yield is easiest to predict.

Drawing primarily from the Turkish example, this essay examines the fit of the input-output policy model, widely used in West, to less developed countries (LDCs). Three hypotheses are explored. In LDCs, compared to the West: (1) Policy patterns are more subject to political penetration; (2) once implemented, policies have a higher probability of penetrating social conditions; and (3) implementation structures and practices are less penetrable by policy directives.

The major bottleneck to innovative policy formation and delivery in LDCs is the implementation process. Bureaucratic resistance and hesitancy to innovate are due to a control rather than service orientation, stemming from the peculiar sequencing of development of state apparatuses vis-a-vis the marketplace. These historical-institutional peculiarities do not appear to detract from the input-output model's ability to spot targets of opportunity for useful policy inquiry in LDCs.

The most basic question about the structure and organization of government is Why we should be concerned about this question at all?' Many of us trained in political science programs during the behavioral revolution were taught to believe that the structures of government were insignificant as a focus for research. The structures ofgovernment became encapsulated in an opaque black box; that part of the political system where decisions were made. Fortunately, this view no longer prevails and there is increasing interest in structural questions, in part generated by the increasing interest in the state as a focus for political inquiry (Dyson, 1980; Benjamin and Elkin, 1985). Much of the work on the state as yet, however, leaves that concept largely undifferentiated and has not dealt systematically with the structure of the state apparatus. Thus, concern for the development of state theory, as well as the concerns of those interested in public policy, has returned structural questions to a more central position in political science.