Are Traffic Tickets Countercyclical?
Federal Reserve Bank of St. Louis Working Paper No. 2006-048A
22 Pages Posted: 9 Aug 2006
Date Written: August 2006
There is anecdotal evidence that local governments use traffic tickets to generate revenue. Using panel data for North Carolina counties, we examine whether changes in local government revenue influence the number of traffic tickets issued. We find strong evidence of an asymmetric response by local governments. Specifically, positive changes in revenue have no effect on traffic tickets, but negative revenue changes increase the number of traffic tickets issued. A one percentage point decrease in revenue yields a 0.38 percentage point increase in traffic tickets. We calculate that traffic ticket revenue supplements a low percentage of local revenue losses.
Keywords: traffic tickets, revenue smoothing, local governments
JEL Classification: H72, D72
Suggested Citation: Suggested Citation