The behavior of U.S. States' debts and deficits

Document Type

Article

Publication Title

Public Sector Economics

Publication Date

9-1-2019

Abstract

Do governments satisfy an intertemporal budget constraint? This paper uses a panel of U.S. state data from 1978-1998 to empirically investigate whether primary surpluses respond to rising debt/GDP ratios. Instead of relying solely on the time-series characteristics of various data series, the paper focuses on the response of primary surpluses when cyclical fluctuations in output and government spending are explicitly considered. Results suggest no surplus response to the accumulation of debt, whether or not cyclical fluctuations are controlled for, in contrast to similar studies done using U.S. federal government data.

Volume

43

Issue

3

First Page

267

Last Page

289

DOI

10.3326/pse.43.3.3

E-ISSN

24598860

Link to Full Text

Share

 
COinS