Spending within limits: Evidence from municipal fiscal restraints
This paper studies the role of a constitutional rule new to the literature: a limit placed by a city on its own ability to tax or spend. We find that such a limit exists in at least 1 in 8 cities, and that limits are not adopted in response to high levels of or variability in taxation. After limit adoption, municipal revenue growth declines by 16 to 22 percent. Our results suggest that institutional constraints may be effective when representative government falls short of the median voter ideal.
|Date of creation:||2012|
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- Downes, Thomas A. & Dye, Richard F. & McGuire, Therese J., 1998. "Do Limits Matter? Evidence on the Effects of Tax Limitations on Student Performance," Journal of Urban Economics, Elsevier, vol. 43(3), pages 401-417, May.
- Downes, Thomas A. & Figlio, David N., 1999. "Do Tax and Expenditure Limits Provide a Free Lunch? Evidence on the Link Between Limits and Public Sector Service Quality," National Tax Journal, National Tax Association, vol. 52(n. 1), pages 113-28, March.
- Alberto Alesina & Reza Baqir & William Easterly, 1999. "Public Goods and Ethnic Divisions," The Quarterly Journal of Economics, Oxford University Press, vol. 114(4), pages 1243-1284.
- Fernando Ferreira & Joseph Gyourko, 2009.
"Do Political Parties Matter? Evidence from U.S. Cities,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 124(1), pages 399-422.
- Fernando Ferreira & Joseph Gyourko, 2007. "Do Political Parties Matter? Evidence from U.S. Cities," NBER Working Papers 13535, National Bureau of Economic Research, Inc.
- James Alm & Mark Skidmore, 1999. "Why do Tax and Expenditure Limitations Pass in State Elections?," Public Finance Review, SAGE Publishing, vol. 27(5), pages 481-510, September.
- Anthony Downs, 1957. "An Economic Theory of Political Action in a Democracy," Journal of Political Economy, University of Chicago Press, vol. 65, pages 135.
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