How well are the states of the Eighth Federal Reserve District prepared for the next recession?
Economic downturns often force state policymakers to enact sizable tax increases or spending cuts to close budget shortfalls. In this paper the authors make use of a Markov-switching regression model to empirically describe the expansions and contractions in the states of the Eighth Federal Reserve District. They use the estimated parameters from the switching regressions to form probability distributions of the revenue shortfalls states are likely to encounter in future slowdowns. This allows them to estimate the probability that each state's projected fiscal-year-end balances will be sufficient to offset the fiscal stress from a recession.
Volume (Year): (2007)
Issue (Month): Nov ()
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- repec:ntj:journl:v:46:y:1993:i:no._4:p:411-23 is not listed on IDEAS
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- Wagner, Gary A & Elder, Erick M., 2007. "Revenue Cycles and the Distribution of Shortfalls in U.S. States: Implications for an "Optimal" Rainy Day Fund," National Tax Journal, National Tax Association, vol. 60(4), pages 727-742, December.
- Theodore M. Crone, 2002. "Consistent economic indexes for the 50 states," Working Papers 02-7, Federal Reserve Bank of Philadelphia, revised 01 Jun 2003.
- Ming-Yuan Leon Li & Hsiou-Wei William Lin & Rau Hsiu-hua, 2005. "The performance of the Markov-switching model on business cycle identification revisited," Applied Economics Letters, Taylor & Francis Journals, vol. 12(8), pages 513-520.
- Kusko, Andrea L. & Rubin, Laura S., 1993. "Measuring the Aggregate High-Employment Budget for State and Local Governments," National Tax Journal, National Tax Association, vol. 46(4), pages 411-423, December.
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