Minimizing the Harm of State Fiscal Volatility

14 Pages Posted: 11 Sep 2010 Last revised: 7 Mar 2011

See all articles by Jeremy Bearer-Friend

Jeremy Bearer-Friend

George Washington University Law School

David Gamage

Indiana University Maurer School of Law

Date Written: September 6, 2010

Abstract

This report’s primary concern is how U.S. state governments should respond to the fiscal volatility created by their balanced budget constraints. Applying the principles of risk allocation theory to this recurring problem, we conclude that states should primarily adjust the rates of broad-based taxes as their economies cycle, rather than fluctuating public spending.

Suggested Citation

Bearer-Friend, Jeremy and Gamage, David, Minimizing the Harm of State Fiscal Volatility (September 6, 2010). State Tax Notes, Vol. 57, No. 10, p. 633, 2010, Available at SSRN: https://ssrn.com/abstract=1675003

Jeremy Bearer-Friend

George Washington University Law School ( email )

2000 H Street, N.W.
Washington, DC 20052
United States

David Gamage (Contact Author)

Indiana University Maurer School of Law ( email )

211 S. Indiana Avenue
Bloomington, IN 47405
United States

HOME PAGE: http://www.law.indiana.edu/about/people/bio.php?name=gamage-david

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