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Local Fiscal Distress: Measurement and Prediction

Author

Listed:
  • Evgenia Gorina
  • Craig Maher
  • Marc Joffe

Abstract

During and after the Great Recession, many local governments were compelled to declare fiscal emergencies, lay off workers, and cut services while others weathered the recession without needing to take such actions. In this paper, we construct an action†based measure of fiscal distress using comprehensive annual financial reports, budgets, and media coverage and then use it as a dependent variable to model fiscal distress as a function of past financial performance and socio†economic environment. The empirical models show the relative importance of fiscal reserves, debt, and revenue composition in predicting local fiscal distress.

Suggested Citation

  • Evgenia Gorina & Craig Maher & Marc Joffe, 2018. "Local Fiscal Distress: Measurement and Prediction," Public Budgeting & Finance, Wiley Blackwell, vol. 38(1), pages 72-94, March.
    • Handle: RePEc:bla:pbudge:v:38:y:2018:i:1:p:72-94
    DOI: 10.1111/pbaf.12165
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    Citations

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    Cited by:

    1. Jarmila SEBESTOVA & Ingrid MAJEROVA & Irena SZAROWSKA, 2018. "Indicators For Assessing The Financial Condition And Municipality Management," REVISTA ADMINISTRATIE SI MANAGEMENT PUBLIC, Faculty of Administration and Public Management, Academy of Economic Studies, Bucharest, Romania, vol. 2018(31), pages 97-110, December.
    2. Chenguang Hu & Kyung Hwan Yun & Ziqi Su & Chang Xi, 2022. "Effective Crisis Management during Adversity: Organizing Resilience Capabilities of Firms and Sustainable Performance during COVID-19," Sustainability, MDPI, vol. 14(20), pages 1-20, October.
    3. Mark Davidson, 2020. "Extreme municipal fiscal stress and austerity? A case study of fiscal reform after Chapter 9 bankruptcy," Environment and Planning C, , vol. 38(3), pages 522-538, May.
    4. Vicente Pina & Patricia Bachiller & Lara Ripoll, 2020. "Testing the Reliability of Financial Sustainability. The Case of Spanish Local Governments," Sustainability, MDPI, vol. 12(17), pages 1-22, August.
    5. Filip Hrůza, 2023. "Analysis of the Financial Behaviour of Czech Municipalities as a Possibility for International Comparisons," Prague Economic Papers, Prague University of Economics and Business, vol. 2023(4), pages 389-410.
    6. Irena Szarowská & Ingrid Majerová & Jarmila Šebestová, 2018. "Indicators of financial stability for needs of municipalities [Indikátory finanční stability pro potřeby obcí]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2018(1), pages 25-45.
    7. Antulov-Fantulin, Nino & Lagravinese, Raffaele & Resce, Giuliano, 2021. "Predicting bankruptcy of local government: A machine learning approach," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 681-699.
    8. Benedict S. Jimenez & Whitney B. Afonso, 2022. "Revisiting the theory of revenue diversification: Insights from an empirical analysis of municipal budgetary solvency," Public Budgeting & Finance, Wiley Blackwell, vol. 42(2), pages 196-220, June.

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