The Revenues-Expenditures Nexus: Evidence from Local Government Data / Douglas Holtz-Eakin, Whitney K. Newey, Harvey S. Rosen.

Format:

Book

Author/Creator:

Holtz-Eakin, Douglas.

Contributor:

National Bureau of Economic Research.

Newey, Whitney K.

Rosen, Harvey S.

Series:

Working Paper Series (National Bureau of Economic Research) no. w2180.

NBER working paper series no. w2180

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

The Revenues-Expenditures Nexus

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1987.

Summary:

This paper examines the intertemporal linkages between local government expenditures and revenues. In the terminology that has become standard in the literature on vector autoregression analysis, the issue is whether revenues Granger-cause expenditures, or expenditures Granger-cause revenues. The main results that emerge from an analysis of fiscal data from 171 municipal governments over the period 1972-1980 are that: 1) one or two years are sufficient to summarize the relevant dynamic interrelationships; 2) there are important intertemporal linkages between expenditures, taxes and grants; and 3) past revenues help predict current expenditures, but past expenditures do not alter the future path of revenues. This last finding is contrary to results that have emerged from previous analyses of federal fiscal data, and hence suggests the need for additional research on the differences in the processes generating local and federal decisions.

Notes:

Print version record

March 1987.