Intertemporal Analysis of State and Local Government Spending: Theory ad Tests

Purpose – This paper aims to reconcile conflicting findings in the literature regarding the extent of consumption smoothing of sub-federal governments. Design/methodology/approach – This paper uses a panel of US state and local government data from 1973 to 2000 to find the extent of consumption smoothing among US state and local governments. Findings – It is found that about 30 percent of spending is determined by permanent resources. Additionally, states with more stringent balanced budget rules are found to smooth more than states with the least stringent balanced budget rules, which do not smooth at all. There is some evidence that liquidity constraints may cause the non-optimal behavior of the states with the least restrictive requirements as they have higher average net debt per capita and face higher risk premia than those with the most stringent rules. Research limitations/implications – Results differ from research using aggregate US data, where it is found that essentially all changes in state and local government spending are due to changes in current resources. The conflict is attributed to panel vs aggregate data use. Other research finds greater smoothing in Norway, where about 65 percent of local government spending is determined by permanent resources, and Sweden, with at least 90 percent of spending changes due to changes in permanent resources. This conflict may be due to institutional differences. Further research is needed in this area. Originality/value – This paper fills a gap in the literature on consumption smoothing by considering a panel of US state and local governments.

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FACTORS ASSOCIATED WITH VARIATIONS IN STATE AND LOCAL GOVERNMENT SPENDING

The Journal of Finance ◽

10.1111/j.1540-6261.1966.tb00252.x ◽

1966 ◽

Vol 21 (3) ◽

pp. 523-534 ◽

Cited By ~ 6

Author(s):

Roy W. Bahl ◽

Robert J. Saunders

Keyword(s):

Local Government ◽

Government Spending ◽

Factors Associated ◽

State And Local Government ◽

State And Local

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INITIATIVE BUDGETING AS AN INSTRUMENT OF TERRITORIAL SELF-GOVERNMENT

Экономическая наука современной России ◽

10.33293/1609-1442-2019-3(86)-77-90 ◽

2019 ◽

Vol 86 (3) ◽

pp. 77-90

Author(s):

V. V. Vagin ◽

N. A. Shapovalova

Keyword(s):

Local Government ◽

Citizen Participation ◽

Institutional Analysis ◽

Institutional Development ◽

Development Programs ◽

Theoretical Understanding ◽

State And Local Government ◽

State And Local ◽

Government Initiative ◽

Local Levels

The article is devoted to the actual issue – institutional analysis of initiative budgeting and territorial public selfgovernment, as well as the possibility of their integration. Over the past few years, a system of civil participation in budget decisions has been built in Russia, the regulatory framework of practices has been created, thousands of employees of state and local government bodies have been trained, project centers have appeared for ensuring development of initiative budgeting. Citizen participation in budget decisions can significantly accelerate the development of the lower level of local government. Initiative budgeting is an innovative instrument of public finance and at the same time a social technology allowing for the real involvement of citizens in the issues of state and municipal governance. Initiative budgeting development programs make it possible to transfer financing of projects aimed at solving local issues with the participation of citizens onto a systemic basis. The results and materials of this study can serve a foundation for theoretical understanding of the institutional development of public finances at the regional and local levels. At the same time, this practical area that was intensively developing in recent years requires deep institutional analysis.

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