State Saving Behavior: Effects of Two Fiscal and Budgetary Institutions

20 Pages Posted: 11 Aug 2008

See all articles by Yilin Hou

Yilin Hou

Maxwell School, Syracuse University

William D. Duncombe

Syracuse University, Maxwell School of Citizenship and Public Affairs

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Abstract

This paper explores how state saving behavior is affected by two fiscal/budgetary institutionsbudget stabilization funds (BSF) and balanced budget requirements (BBR). While adopted for different reasons, BSF and BBR could have significant effects on state savings behavior depending on their design features. We empirically examine the effects of BSF and BBR using a panel data set that covers three business cycles, controlling for budgetary institutions, state economy, social services, politics, and business cycles. The paper finds that adopting BSF and BBR can raise savings by 2 and 3 percentage points, respectively; however, the effects depend crucially on the devices' design.

Suggested Citation

Hou, Yilin and Duncombe, William David, State Saving Behavior: Effects of Two Fiscal and Budgetary Institutions. Public Budgeting & Finance, Vol. 28, Issue 3, pp. 48-67, Fall 2008, Available at SSRN: https://ssrn.com/abstract=1213297 or http://dx.doi.org/10.1111/j.1540-5850.2008.00910.x

Yilin Hou (Contact Author)

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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