Do Budget Maneuvers Reduce Future State Budget Resilience? Evidence from the Great Recession

47 Pages Posted: 18 Oct 2021

See all articles by John Stavick

John Stavick

Indiana University - School of Public and Environmental Affairs

Date Written: October 14, 2021

Abstract

Conventional wisdom suggests budget maneuvers threaten long-term structural balance because they transfer resources from the future to the present by non-transparent means. However, the incidence of maneuver use remains poorly understood due to their difficulty to observe. The Volcker Alliance’s definitions of budget maneuvers are used to create an original tally of their use by states during the Great Recession. Drawing from the regional economic resilience literature, post-recession state budgets are binned into categories of fiscal resilience. Multinomial logit regression is implemented to estimate whether budget maneuvers used in the Great Recession increased the probability of experiencing negative post-recession budget outcomes. The findings do not show a significant relationship between post-Great Recession budget outcomes and maneuver use. While this research does not support budget maneuvers as a unique threat to long-term budget resilience, it does find that intensive use of certain maneuvers can create mounting budget risks in future years.

Keywords: state budgets, cutback budgeting, economic resiliency, budget maneuvers

JEL Classification: H12; H72; H74

Suggested Citation

Stavick, John, Do Budget Maneuvers Reduce Future State Budget Resilience? Evidence from the Great Recession (October 14, 2021). Available at SSRN: https://ssrn.com/abstract=3942519 or http://dx.doi.org/10.2139/ssrn.3942519

John Stavick (Contact Author)

Indiana University - School of Public and Environmental Affairs ( email )

1315 East 10th Street
Bloomington, IN 47405
United States

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