Journal article
Local Fiscal Responses to Procyclical Changes in State Aid
Publius, Vol.44(4), pp.587-608
2014
DOI: 10.1093/publius/pjt039
Abstract
This article examines the asymmetry in local government responses to economic-cycle-based changes of state aid in a framework that distinguishes current outlay from noncurrent expenses and discretionary savings. Employing a panel dataset of Massachusetts municipalities for two economic cycles, we obtain three findings. First, we do not find evidence of property-tax relief during economic booms. Second, discretionary savings may be used to cover noncurrent outlays during booms and to offset spending cuts during recessions. Finally, we find a large (asymmetric) fiscal inducement that may emerge during recessions when state aid cuts coincide with property-tax shortfalls. While these context-specific results may not be easily generalizable, they necessitate further research into the role of local discretionary savings and cash reserves in intergovernmental fiscal relations.
Details
- Title: Subtitle
- Local Fiscal Responses to Procyclical Changes in State Aid
- Creators
- Phuong Nguyen-HoangYilin Hou
- Resource Type
- Journal article
- Publication Details
- Publius, Vol.44(4), pp.587-608
- DOI
- 10.1093/publius/pjt039
- ISSN
- 0048-5950
- eISSN
- 1747-7107
- Language
- English
- Date published
- 2014
- Academic Unit
- Public Policy Center (Archive); School of Planning and Public Affairs
- Record Identifier
- 9984083237202771
Metrics
9 Record Views