Minimizing the Harm of State Fiscal Volatility
University of California at Berkeley
Indiana University Maurer School of Law
September 6, 2010
State Tax Notes, Vol. 57, No. 10, p. 633, 2010
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.
Number of Pages in PDF File: 14
Date posted: September 11, 2010 ; Last revised: March 7, 2011