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The Revenues-Expenditures Nexus: Evidence from Local Government Data

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Author Info
Holtz-Eakin, Douglas
Newey, Whitney
Rosen, Harvey S

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Abstract

This paper examines the intertemporal linkages between local government expenditures and revenues. The main results that emerge from an analysis of fiscal data from 171 municipal governments over the period 1972-80 are that (1) one or two years are sufficient to summarize the relevant dynamic interrelationships; (2) there are important intertemporal linkages between expenditures, taxes, and grants; and (3) past revenues help predict current expenditures, but past expenditures do not alter the future path of revenues. This last finding is contrary to results that have emerged from previous analyses of federal fiscal data. Copyright 1989 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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Publisher Info
Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 30 (1989)
Issue (Month): 2 (May)
Pages: 415-29
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Handle: RePEc:ier:iecrev:v:30:y:1989:i:2:p:415-29

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  1. von Furstenberg, George M & Green, R Jeffrey & Jeong, Jin-Ho, 1986. "Tax and Spend, or Spend and Tax?," The Review of Economics and Statistics, MIT Press, vol. 68(2), pages 179-88, May. [Downloadable!] (restricted)
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  1. Douglas Holtz-Eakin & Whitney Newey & Harvey Rosen, 1987. "Wages and Hours: Estimating Vector Autoregressions with Panel Data," Working Papers 602, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
  2. Matz Dahlberg & Eva Johansson, 2000. "An examination of the dynamic behaviour of local governments using GMM bootstrapping methods," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(4), pages 401-416. [Downloadable!]
    Other versions:
  3. Baffes, John & Shah, Anwar, 1990. "Taxing choices in deficit reduction," Policy Research Working Paper Series 556, The World Bank. [Downloadable!]
  4. Buettner, Thiess, 2001. "Fiscal externalities in local tax competition : empirical evidence from a panel of German jurisdictions," ZEW Discussion Papers 01-11, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  5. Bent E. Sorensen & Oved Yosha, 2001. "Is state fiscal policy asymmetric over the business cycle?," Economic Review, Federal Reserve Bank of Kansas City, issue Q III, pages 43-64. [Downloadable!]
  6. Andrew Williams & Abu Siddique, 2008. "The use (and abuse) of governance indicators in economics: a review," Economics of Governance, Springer, vol. 9(2), pages 131-175, May. [Downloadable!] (restricted)
  7. Diane Lim Rogers & John H. Rogers, 1995. "Political competition, causal relationships between taxes and spending, and their influence on government size: evidence from state-level data," International Finance Discussion Papers 500, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  8. Thiess Buettner & David Wildasin, 2002. "The Dynamics of Municipal Fiscal Adjustment," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  9. George C. Bitros, 2003. "Firm Ownership and Economic Efficiency," Microeconomics 0303002, EconWPA. [Downloadable!]
  10. M E Haque & D H Kim, 2003. "Public Investment in Transportation and Communication and Growth:A Dynamic Panel Approach," Centre for Growth and Business Cycle Research Discussion Paper Series 31, Economics, The Univeristy of Manchester. [Downloadable!]
    Other versions:
  11. Toshihiro Ihori & Takero Doi & Hiroki Kondo, 2000. "Japanese Fiscal Reform: Fiscal Reconstruction and Fiscal Policy," CIRJE F-Series CIRJE-F-83, CIRJE, Faculty of Economics, University of Tokyo. [Downloadable!]
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  12. William Greene, 2002. "The Behavior of the Fixed Effects Estimator in Nonlinear Models," Working Papers 02-05, New York University, Leonard N. Stern School of Business, Department of Economics. [Downloadable!]
  13. Dahlberg, Matz & Jacob, Johanna, 2000. "Sluggishness, Endogeneity and the Demand for Local Public Services," Working Paper Series 2000:17, Uppsala University, Department of Economics. [Downloadable!]
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  14. David Greenaway & Alessandra Guariglia & Zhihong Yu, . "The More the Better? Foreign Ownership and Corporate Performance in China," Discussion Papers 09/05, University of Nottingham, GEP. [Downloadable!]
  15. William Greene, 2001. "Fixed and Random Effects in Nonlinear Models," Working Papers 01-01, New York University, Leonard N. Stern School of Business, Department of Economics. [Downloadable!]
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  16. Randall W. Eberts & Timothy J. Gronberg, 1992. "Wagner's hypothesis: a local perspective," Working Paper 9202, Federal Reserve Bank of Cleveland. [Downloadable!]
  17. Norbert Funke & Faisal Ahmed & Rabah Arezki, 2005. "The Composition of Capital Flows: Is South Africa Different?," IMF Working Papers 05/40, International Monetary Fund. [Downloadable!]
  18. David Maddison, 2004. "Causality and Museum Subsidies," Journal of Cultural Economics, Springer, vol. 28(2), pages 89-108, May. [Downloadable!] (restricted)
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