The 1991 State and Local Fiscal Crisis

Fiscal stringency and fiscal sustainability: Panel evidence from the American state and local governments

Most state (and local) governments in the U.S. operate under formal fiscal rules which limit their ability to run budget deficits and resort to debt financing. A priori, one would expect to find evidence in favor of an intertemporally balanced budget, or fiscal sustainability, for these states, especially those characterized by a relatively high degree of fiscal stringency. We test this hypothe...

Fiscal policy, banks and the financial crisis

This paper studies the effectiveness of Euro Area (EA) fiscal policy, during the recent financial crisis, using an estimated New Keynesian model with a bank. A key dimension of policy in the crisis was massive government support for banks—that dimension has so far received little attention in the macroeconomics literature. We use the estimated model to analyze the effects of bank asset losses, ...

Causes of Fiscal Crises in State and Local Governments

Financial insolvency is a rare occurrence in American state and local governments. However, when it does happen, as in the case of Detroit’s historical bankruptcy filing in 2013, the consequences for vital city services, public employees, and taxpayers can be devastating. This essay reviews existing and emerging research on the causes of government fiscal crises, paying particular attention to ...

Fiscal Centralization of Indiana State and Local Government

State and Local Government Choices in Fiscal Redistribution

Roy Bahl, Jorge Martinez–Vazquez, & Sally Wallace The Andrew Young School of Policy Studies, Georgia State University, Atlanta GA, 30303 Abstract Economists have devoted relatively little attention to explaining why some state and local governments choose more progressive fiscal instruments than others. This paper provides an empirical model to identify the determinants of income redistribution...