MODELING BUREAUCRACY - THE CASE OF THE AUSTRALIAN FEDERAL-BUDGET SECTOR 1982-1992

A substantial literature exists on the economic analysis of bureaucrac y, which includes formal models of bureaucratic behaviour by Niskanen (1971) and Dunleavy (1991). This article develops hypotheses from thos e models about changes in size of bureaux over time and tests them aga inst data on the Australian federal budget sector in 1982-83 and 1991- 92. The models predict that bureaucrats usually will be able to influe nce the size or structure of their bureaux in line with their personal preferences. However, the Australian data suggest that the extent of such influence may be less than is assumed in either model and that th e preferences of politicians are more influential than the models allo w. One conclusion is that, if bureaucracy is to be modelled, a princip al-agent approach will have more to offer than the neo-classical maxim izing framework adopted by Niskanen in particular A further conclusion , at odds with those of Niskanen and weakening his case for wholesale privatization, is that bureaucratic dysfunctions may be amenable to re form of the political and bureaucratic rules and systems.