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Transparency in state debt disclosure

Author

Listed:
  • Zhao, Bo

    () (Federal Reserve Bank of Boston)

  • Wang, Wen

    () (Rutgers University)

Abstract

We develop a new measure of relative debt transparency by comparing the amount of state debt reported in the annual Census survey and the amount reported in the statistical section of the state Comprehensive Annual Financial Report (CAFR). GASB 44 requires states to start reporting their total debt in the CAFR statistical section in FY 2006. However, states are allowed to use accounting choices to exclude some dependent agencies’ debt, which contributes to a gap between the two data sources. The regression results suggest that the gap tends to increase when states face greater fiscal stress or less political competition. Such patterns are not found in the pre-GASB 44 period.

Suggested Citation

  • Zhao, Bo & Wang, Wen, 2017. "Transparency in state debt disclosure," Working Papers 17-10, Federal Reserve Bank of Boston.
  • Handle: RePEc:fip:fedbwp:17-10
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    References listed on IDEAS

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    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.
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    4. Daniel Albalate del Sol, 2013. "The institutional, economic and social determinants of local government transparency," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 16(1), pages 90-107, March.
    5. Timothy C. Irwin, 2015. "Defining The Government'S Debt And Deficit," Journal of Economic Surveys, Wiley Blackwell, vol. 29(4), pages 711-732, September.
    6. William Baber & Pradyot Sen, 1986. "The political process and the use of debt financing by state governments," Public Choice, Springer, vol. 48(3), pages 201-215, January.
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    9. Yilin Hou, 2005. "Fiscal Reserves and State Own-Source Expenditure in Downturn Years," Public Finance Review, , vol. 33(1), pages 117-144, January.
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    12. Wehner, Joachim & de Renzio, Paolo, 2013. "Citizens, Legislators, and Executive Disclosure: The Political Determinants of Fiscal Transparency," World Development, Elsevier, vol. 41(C), pages 96-108.
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    More about this item

    Keywords

    fiscal transparency; state debt; GASB; accounting choices; dependent agencies;

    JEL classification:

    • H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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