How does budget accounting impact the financial decision-making process of organizations?
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Budget accounting has a significant impact on the financial decision-making process of organizations. The "golden rule" of separating capital and ordinary account budgets allows governments to finance only capital items with debt, leading to improved efficiency in the allocation of resources . In the context of interest-group politics, the threat of producer protection due to regulatory agency politics results in low-powered incentive schemes for regulated firms . Additionally, the organizational response to regulatory agency politics is to reduce the stakes interest groups have in regulation . In the study of limited memory on human behavior, a model grounded in psychological and biological research predicts both over- and underreaction, providing insights into consumption decisions . Finally, the importance of dynamic aggregation bias in accounting for the PPP puzzle is highlighted, with the persistence of real exchange rates falling dramatically when heterogeneity is taken into account .
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