Capital Budgeting Under Capital Rationing: An Analytical Overview of Optimization Models for Government

Capital rationing is a real decision problem in government, yet it has never been seriously addressed in the literature on public budgeting. Conventional methods such as NPV or IRR that frequently appear in the discussion on the subject are limited in their scope. Alternative methods such as mathema...

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Bibliographic Details
Published inInternational journal of public administration Vol. 31; no. 2; pp. 168 - 194
Main Author Khan, Aman
Format Journal Article
LanguageEnglish
Published New York Taylor & Francis Group 01.01.2008
Marcel Dekker, Inc
Subjects
Budgets
Capital
Capital budgeting
capital rationing
Mathematical programming
Optimization
Private Sector
Public Administration
Rationing
simulation
Studies
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Summary:Capital rationing is a real decision problem in government, yet it has never been seriously addressed in the literature on public budgeting. Conventional methods such as NPV or IRR that frequently appear in the discussion on the subject are limited in their scope. Alternative methods such as mathematical programming, which can substantially overcome some of the limitations of the conventional methods, have been extensively used in the private sector, but their applications have been few and far between in government. This article illustrates the potential these models hold for the capital rationing problem in government.
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ISSN:0190-0692
1532-4265
DOI:10.1080/01900690701411016