Can participatory budgeting mitigate government debt risk？—An empirical analysis using cross-national panel data

Our analysis indicates that, on average, government debt risk is markedly lower in cases of participatory budgeting, a finding that is significant at the 1% level. This finding remains robust after replacing the explained variable to address robustness concerns and employing instrumental variables to mitigate endogeneity issues. Mediation analysis further indicates that the quality of explicit debt disclosure serves a significant mediating role, whereas contingent liabilities do not exhibit a mediating effect. Additionally, the mitigating effect of participatory budgeting on government debt risk is more pronounced in countries adopting accrual-based government accounting compared to those using cash-based accounting.