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Intertemporal Analysis of State and Local Government Spending: Theory and Tests

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  • Holtz-Eakin Douglas
  • Rosen Harvey S.
  • Tilly Schuyler

Abstract

Do state and local governments smooth their consumption spending across years, or is their spending driven mainly by contemporaneous changes in resources? We design a test to determine which view of state and local spending is more consistent with the data. We find that state and local spending is determined primarily by current (as opposed to permanent) resources. That is, despite their apparent ability to skirt balanced budget laws, states and localities do not typically smooth their expenditures over time.
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Suggested Citation

  • Holtz-Eakin Douglas & Rosen Harvey S. & Tilly Schuyler, 1994. "Intertemporal Analysis of State and Local Government Spending: Theory and Tests," Journal of Urban Economics, Elsevier, vol. 35(2), pages 159-174, March.
    • Handle: RePEc:eee:juecon:v:35:y:1994:i:2:p:159-174
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General

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