18 Pages Posted: 7 Jun 2013
Date Written: Summer 2013
This study tests the effects of balanced budget requirements on three measures of state expenditure using data on 48 states for the years 1950–2004. We find that the following rules are effective in constraining expenditures: (1) requiring that the governor submits a balanced budget; (2) placing controls on supplemental appropriations; and (3) prohibiting the carry‐over of a deficit from one fiscal year or biennium into the next. The latter two rules exert larger individual effects than the first. All else equal, states can best improve their prospects of reigning in spending by instituting technical rules that govern budgetary outcomes, as opposed to political rules that dictate how the budget is assembled and approved.
Suggested Citation: Suggested Citation
Smith, Daniel L. and Hou, Yilin, Balanced Budget Requirements and State Spending: A Long–Panel Study (Summer 2013). Public Budgeting & Finance, Vol. 33, Issue 2, pp. 1-18, 2013. Available at SSRN: https://ssrn.com/abstract=2275816 or http://dx.doi.org/10.1111/j.1540-5850.2013.12007.x
This is a Wiley-Blackwell Publishing paper. Wiley-Blackwell Publishing charges $38.00 .
File name: pbaf12007.
If you wish to purchase the right to make copies of this paper for distribution to others, please select the quantity.