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Budget Institutions and Fiscal Policy in the U.S. States

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Author Info
James M. Poterba

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Abstract

This paper summarizes state balanced budget requirements, and the available empirical evidence on the effect of these rules on state fiscal policies. Existing state rules differ from many current proposals at the federal level. They are typically restricted to part of the state budget, they frequently permit short term borrowing, and they lack formal enforcement mechanisms. The paper also surveys previous research on how anti-deficit provisions affect state fiscal policy. The available evidence indicates that stringent anti-deficit provisions lead to more rapid adjustment of state taxes and expenditures when fiscal deficits emerge. This suggests that changing the federal budget process has the potential to affect federal fiscal policy.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5449.

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Date of creation: Feb 1996
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Handle: RePEc:nbr:nberwo:5449

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Find related papers by JEL classification:
H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems

References listed on IDEAS
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  1. Henning Bohn & Robert P. Inman, . "Constitutional Limitations and Public Deficits: Evidence from the U.S. States," University of California at Santa Barbara, Economics Working Paper Series 18-95, Department of Economics, UC Santa Barbara.
  2. Poterba, James M, 1994. "State Responses to Fiscal Crises: The Effects of Budgetary Institutions and Politics," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 799-821, August. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Khemani, Stuti, 2002. "Federal politics and budget deficits: evidence from the states of India," Policy Research Working Paper Series 2915, The World Bank. [Downloadable!]
  2. John Bradbury & W. Crain, 2005. "Legislative district configurations and fiscal policy in American States," Public Choice, Springer, vol. 125(3), pages 385-407, December. [Downloadable!] (restricted)
  3. Joao L.M. Amador, 2000. "Fiscal Policy And Budget Deficit Stability In A Continuous Time Stochastic Economy," Computing in Economics and Finance 2000 27, Society for Computational Economics. [Downloadable!]
  4. Bernd Huber & Marco Runkel, 2005. "Interregional Redistribution and Budget Institutions under Asymmetric Information," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  5. David M. Cutler & Douglas W. Elmendorf & Richard Zeckhauser, 1997. "Restraining the Leviathan: property tax limitations in Massachusetts," Finance and Economics Discussion Series 1997-47, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
    Other versions:
  6. Kausik Chaudhuri & Sugato Dasgupta, 2006. "The political determinants of fiscal policies in the states of India: An empirical investigation," The Journal of Development Studies, Taylor and Francis Journals, vol. 42(4), pages 640-661, May. [Downloadable!] (restricted)
  7. Jack Diamond, 2002. "Budget System Reform in Transitional Economies: The Experience of Russia," IMF Working Papers 02/22, International Monetary Fund. [Downloadable!]
  8. Kausik Chaudhuri & Sugato Dasgupta, 2005. "The political determinants of central governments' economic policies in India: an empirical investigation," Journal of International Development, John Wiley & Sons, Ltd., vol. 17(7), pages 957-978. [Downloadable!]
  9. Allan Drazen, 2002. "Central Bank Independence, Democracy, and Dollarization," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 1-17, May. [Downloadable!]
  10. Patricia Funk & Christina Gathmann, 2009. "Does Direct Democracy Reduce the Size of Government? New Evidence from Historical Data, 1890-2000," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  11. Bayar, Ali H., 1999. "Entry and Exit Dynamics of 'Excessive Deficits' in the European Union," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  12. Robert P. Inman, 1998. "Do Balanced Budget Rules Work? U.S. Experience and Possible Lessons for the EMU," NBER Working Papers 5838, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  13. Russell Cooper & Hubert Kempf & Dan Peled, 2005. "Is it is or is it ain't my obligation? Regional debt in a fiscal federation," Working Papers 05-07, Federal Reserve Bank of Dallas. [Downloadable!]
    Other versions:
  14. Guiseppe Pisauro, . "Intergovernmental Relations and Fiscal Discipline: Between Common Tax Resources and Soft Budget Constraints," IMF Working Papers 01/65, International Monetary Fund. [Downloadable!]
  15. Thomas D. Willett, . "A Political Economy Analysis of the Maastricht and Stability Pact Fiscal Criteria," Claremont Colleges Working Papers 1999-33, Claremont Colleges. [Downloadable!]
  16. Lars P. Feld & Christoph A. Schaltegger, 2004. "Do Large Cabinets Favor Large Governments? Evidence from Swiss Sub-federal Jurisdictions," Marburg Working Papers on Economics 200421, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung). [Downloadable!]
    Other versions:
  17. Amador, Joao L. M., 2000. "Fiscal Policy and Budget Deficit Stability in a Continuous Time Stochastic Economy," FEUNL Working Paper Series wp384, Universidade Nova de Lisboa, Faculdade de Economia. [Downloadable!]
  18. Russell Cooper & Hubert Kempf, 2000. "Designing Stabilization Policy in a Monetary Union," Econometric Society World Congress 2000 Contributed Papers 0529, Econometric Society. [Downloadable!]
    Other versions:
  19. Alfons J. Weichenrieder, 2009. "A Note on Local Public Investment and Debt Limitation in a Federation," Finnish Economic Papers, Finnish Economic Association, vol. 22(1), pages 3-8, Spring. [Downloadable!]
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This page was last updated on 2009-11-21.

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