Causes and consequences of fiscal stress in Michigan cities
As the world economy emerges from the real estate and financial crises, economists and policymakers are considering the implications for government finance. One facet of the recession is the precipitous fall in housing values that is expected to have long-lasting effects on local government finance. Throughout the United States and Europe, local officials have not experienced challenges of this magnitude in generations. How might we expect local government finances to respond/evolve in the wake of the crisis? We gain insight on this question by studying city finance in a state that has struggled for years. In particular, many Michigan cities have experienced significant and ongoing fiscal challenges for at least a decade and acute crisis over the last several years. We examine how expenditure patterns have changed in response to these challenges. Using data for most cities in Michigan for years 2005 through 2009, we find that expenditures in the General Government, Public Works, and Parks and Recreation categories were responsive to fiscal stress, and Capital Expenditures have been particularly vulnerable. However, expenditures in essential services such as Public Safety were generally not adversely affected. Our research offers insights regarding the likely implications of the real estate crisis for cities in the United States as well as in Europe that have, until very recently, enjoyed relative economic prosperity and limited fiscal challenges.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
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.:
- Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002.
"How Much Should We Trust Differences-in-Differences Estimates?,"
NBER Working Papers
8841, National Bureau of Economic Research, Inc.
- Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 249-275.
- Bergstrom, Theodore C & Goodman, Robert P, 1973. "Private Demands for Public Goods," American Economic Review, American Economic Association, vol. 63(3), pages 280-96, June.
- Arellano, M, 1987. "Computing Robust Standard Errors for Within-Groups Estimators," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 49(4), pages 431-34, November.
- 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.
- James M. Poterba, 1993. "State Responses to Fiscal Crisis: The Effects of Budgetary Institutionsand Politics," NBER Working Papers 4375, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:eee:regeco:v:41:y:2011:i:4:p:360-371. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Shamier, Wendy)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.