Anomalies in the public sector.

Behavioral anomalies - violations of the von Neumann-Morgenstern axioms of rational behavior - show an increasing importance in the Public Choice literature. We analyse anomalies on the local Flemish government level and do exhaustive empirical testing. We will concentrate on different forms of budgetary windfalls. Responses of local governments to unanticipated changes in grants, tax income and deficits will be looked upon. Furthermore, we will study the influence on the local budgets of the privatisation of the Gemeentekrediet.