Budget Institutions and Fiscal Policy in the U.S. States

16 Pages Posted: 20 Jul 2000 Last revised: 25 May 2018

See all articles by James M. Poterba

James M. Poterba

National Bureau of Economic Research (NBER); Massachusetts Institute of Technology (MIT) - Department of Economics

Date Written: February 1996

Abstract

This paper summarizes state balanced budget requirements, and the available empirical evidence on the effect of these rules on state fiscal policies. Existing state rules differ from many current proposals at the federal level. They are typically restricted to part of the state budget, they frequently permit short term borrowing, and they lack formal enforcement mechanisms. The paper also surveys previous research on how anti-deficit provisions affect state fiscal policy. The available evidence indicates that stringent anti-deficit provisions lead to more rapid adjustment of state taxes and expenditures when fiscal deficits emerge. This suggests that changing the federal budget process has the potential to affect federal fiscal policy.

Suggested Citation

Poterba, James M., Budget Institutions and Fiscal Policy in the U.S. States (February 1996). NBER Working Paper No. w5449. Available at SSRN: https://ssrn.com/abstract=225506

James M. Poterba (Contact Author)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

50 Memorial Drive
E52-350
Cambridge, MA 02142
United States
617-253-6673 (Phone)
617-253-1330 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
53
rank
370,080
Abstract Views
1,399
PlumX Metrics