Determinants of Pay-as-You-Go Financing of Capital Projects: Evidence from the States

25 Pages Posted: 9 Nov 2007

See all articles by Wen Wang

Wen Wang

Indiana University Purdue University Indianapolis (IUPUI) - School of Public and Environmental Affairs (SPEA)

Yilin Hou

Maxwell School, Syracuse University

William D. Duncombe

Syracuse University, Maxwell School of Citizenship and Public Affairs

Abstract

Although states have long practiced pay-as-you-go in financing their capital projects as a supplement to debt, academia has paid scarce attention to pay-go financing. This study fills in the niche by providing empirical evidence on what determines the use of pay-go in financing capital projects. It develops a model that considers the preferences of both voters and politicians when they make capital financing decisions in a given institutional setting. The empirical results suggest that the use of pay-go is affected by a state's income level, its economic conditions, the presence of a divided government, as well as its budgetary institutions.

Suggested Citation

Wang, Wen and Hou, Yilin and Duncombe, William David, Determinants of Pay-as-You-Go Financing of Capital Projects: Evidence from the States. Public Budgeting & Finance, Vol. 27, Issue 4, pp. 18-42, Winter 2007, Available at SSRN: https://ssrn.com/abstract=1028416 or http://dx.doi.org/10.1111/j.1540-5850.2007.00892.x

Wen Wang (Contact Author)

Indiana University Purdue University Indianapolis (IUPUI) - School of Public and Environmental Affairs (SPEA) ( email )

801 West Michigan Street, BS 4062
Indianapolis, IN 46202
United States
3172741078 (Phone)
3172741078 (Fax)

HOME PAGE: http://www.spea.iupui.edu/facultyandstaff/faculty-directory/wwang.php

Yilin Hou

Maxwell School, Syracuse University ( email )

426 Eggers Hall
Syracuse, NY 13244-1020
United States
315-443-3114 (Phone)

HOME PAGE: http://www.maxwell.syr.edu/pa/cpr/Hou,_Yilin/

William David Duncombe

Syracuse University, Maxwell School of Citizenship and Public Affairs ( email )

Center for Policy Research
426 Eggers Hall
Syracuse, NY 13244-1020
United States
315-443-9040 (Phone)

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