State Responses to Fiscal Crisis: The Effects of Budgetary Institutionsand Politics / James M. Poterba.

Format:

Book

Author/Creator:

Poterba, James M.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4375.

NBER working paper series no. w4375

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

State Responses to Fiscal Crisis

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1993.

Summary:

This paper explores how state fiscal institutions and political circumstances affect the dynamics of state taxes and spending during periods of fiscal stress. The analysis focuses on the late 1980s, when sharp economic downturns in several regions, coupled with increased expenditure demands, led to substantial state budget deficits. State fiscal institutions, such as "no deficit carryover" rules and tax and expenditure limitations, appear to have real effects on the speed and nature of fiscal adjustment to unexpected deficits. Political factors are also important. When a single party controls the state house and the governorship, the reaction to state deficits is much faster than when party control is divided. In gubernatorial election years, tax increases and spending cuts are both significantly smaller than at other times.

Notes:

Print version record

May 1993.