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Does Monitoring Local Government Fiscal Conditions Affect Outcomes? Evidence from Michigan

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  • Thomas Luke Spreen
  • Caitlin M. Cheek

Abstract

The goal of this article is to assess whether state monitoring and reporting of local government fiscal condition causes improvement in the financial situation of local governments. From 2006 to 2011, Michigan scored the fiscal conditions of each of its local governments based on their performance across nine indicators of fiscal health. Using audited financial data, we construct a panel of several of those financial indicators for a sample of county and municipal governments in Michigan and neighboring states with no similar program. We employ a difference-in-differences methodology to test whether Michigan’s local governments performed better across the selected indicators relative to their peers in neighboring states. The results of the analysis show no significant change in the monitored indicators among Michigan’s local governments relative to local governments in control states. We largely duplicate the baseline results using propensity score matching.

Suggested Citation

  • Thomas Luke Spreen & Caitlin M. Cheek, 2016. "Does Monitoring Local Government Fiscal Conditions Affect Outcomes? Evidence from Michigan," Public Finance Review, , vol. 44(6), pages 722-745, November.
    • Handle: RePEc:sae:pubfin:v:44:y:2016:i:6:p:722-745
    DOI: 10.1177/1091142115611743
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    References listed on IDEAS

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    1. Marco Caliendo & Sabine Kopeinig, 2008. "Some Practical Guidance For The Implementation Of Propensity Score Matching," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 31-72, February.
    2. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
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    Cited by:

    1. Thompson, Paul N., 2019. "Are school officials held accountable for fiscal stress? Evidence from school district financial intervention systems," Economics of Education Review, Elsevier, vol. 72(C), pages 44-54.
    2. Thompson, Paul N., 2017. "Effects of fiscal stress labels on municipal government finances, housing prices, and the quality of public services: Evidence from Ohio," Regional Science and Urban Economics, Elsevier, vol. 64(C), pages 98-116.
    3. Paul N. Thompson & Joseph Whitley, 2017. "The effect of school district and municipal government financial health information on local tax election outcomes: evidence from fiscal stress labels in Ohio," Public Choice, Springer, vol. 170(3), pages 265-288, March.

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