01969cas a2200253 a 4500 AALejournalIMF004248 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451864649 1018-5941 BD-DhAAL BD-DhAAL Leruth, Luc. A Principal-Agent Theory Approach to Public Expenditure Management Systems in Developing Countries / Luc Leruth, Elisabeth Paul. Washington, D.C. : International Monetary Fund, 2006. 1 online resource (43 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students A well-functioning public expenditure management (PEM) system is considered a critical pillar of government efficiency, on par with a low-distortion tax system and efficient tax administration. The paper discusses PEM systems in developing countries using an analytical framework based on principal-agent theory. This simple model can be applied to various PEM systems, and allows for comparisons between institutional settings. To illustrate this, we analyze the benefits derived from the use by the Ministry of Finance (MoF) of two control instruments; ex post audits and ex ante controls, and assess their value in terms of their ability to deter cheating. We derive a set of possible "control regimes" which can be used by the MoF. Although we illustrate the use of the model using developing countries, it is also relevant to developed economies. Mode of access: Internet Paul, Elisabeth. IMF Working Papers; Working Paper ; No. 2006/204 Full text available on IMF http://elibrary.imf.org/view/journals/001/2006/204/001.2006.issue-204-en.xml IMF e-Library