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

24 Pages Posted: 13 Feb 2007 Last revised: 22 Feb 2021

See all articles by Douglas Holtz-Eakin

Douglas Holtz-Eakin

Syracuse University; National Bureau of Economic Research (NBER)

Harvey S. Rosen

Princeton University - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute)

Schuyler Tilly

Syracuse University - Department of Economics

Date Written: January 1993

Abstract

Do state and local governments smooth their consumption spending across years, or is their spending driven mainly by contemporaneous changes in resources? We design a test to determine which view of state and local spending is more consistent with the data. We find that state and local spending is determined primarily by current (as opposed to permanent) resources. That is, despite their apparent ability to skirt balanced budget laws, states and localities do not typically smooth their expenditures over time.

Suggested Citation

Holtz-Eakin, Douglas and Rosen, Harvey S. and Tilly, Schuyler, Intertemporal Analysis of State and Local Government Spending: Theory Ad Tests (January 1993). NBER Working Paper No. w4261, Available at SSRN: https://ssrn.com/abstract=478707

Douglas Holtz-Eakin (Contact Author)

Syracuse University ( email )

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Harvey S. Rosen

Princeton University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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CESifo (Center for Economic Studies and Ifo Institute)

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Germany

Schuyler Tilly

Syracuse University - Department of Economics

Syracuse, NY 13244-1020
United States

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