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A forecasting model for state expenditures

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  • Jane Leuthold

Abstract

In this study, the median voter model is applied to the problem of predicting state public expenditures in four major categories: human services, elementary and secondary education, higher education, and health services. Demand functions for public services are derived within a formal utility-maximizing model. The resulting model is estimated using time-series data for a representative state and the model is used to predict state spending for fiscal year 1985. The results of the estimation are consistent with the predictions of the median voter model and the forecasts correspond closely to those made by the State Bureau of the Budget. In contrast, a naive autoregressive model of state spending performs poorly. Copyright Martinus Nijhoff Publishers 1988

Suggested Citation

  • Jane Leuthold, 1988. "A forecasting model for state expenditures," Public Choice, Springer, vol. 56(1), pages 45-55, January.
    • Handle: RePEc:kap:pubcho:v:56:y:1988:i:1:p:45-55
    DOI: 10.1007/BF00052069
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    References listed on IDEAS

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    1. Bergstrom, Theodore C & Goodman, Robert P, 1973. "Private Demands for Public Goods," American Economic Review, American Economic Association, vol. 63(3), pages 280-296, June.
    2. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December.
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    5. Ohls, James C & Wales, Terence J, 1972. "Supply and Demand for State and Local Services," The Review of Economics and Statistics, MIT Press, vol. 54(4), pages 424-430, November.
    6. Robert Mackay & Carolyn Weaver, 1979. "On the mutuality of interests between bureaus and high demand review committees: A perverse result," Public Choice, Springer, vol. 34(3), pages 481-491, September.
    7. Thomas Romer & Howard Rosenthal, 1979. "Bureaucrats Versus Voters: On the Political Economy of Resource Allocation by Direct Democracy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 93(4), pages 563-587.
    8. Lovell, Michael C, 1978. "Spending for Education: The Exercise of Public Choice," The Review of Economics and Statistics, MIT Press, vol. 60(4), pages 487-495, November.
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    Cited by:

    1. Therese A. Mccarty & Stephen J. Schmidt, 2001. "Dynamic Patterns in State Government Finance," Public Finance Review, , vol. 29(3), pages 208-222, May.

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