Understanding Public Participation as a Mechanism Affecting Government Fiscal Outcomes: Theory and Evidence From Participatory Budgeting.

This article examines the impact of participatory budgeting (PB)—a form of public participation in local government budget decisions—on fiscal outcomes in South Korean local governments from 2012 to 2018. It conceptualizes PB along three dimensions: the degree of citizen participation and deliberation, the mode of communication and decision making, and the authority delegated to participants. Using instrumental variable regression to address endogeneity, the study finds strong evidence that increased citizen participation and deliberation in PB positively correlate with improved fiscal balance, while the authority granted to participants shows only weak evidence of influence. The findings suggest that the quality of public participation, particularly authentic engagement and deliberation, plays a critical role in enhancing government fiscal accountability, though effects on local debt levels are not significant.