Public Sector Economics, Vol. 43 No. 3, 2019.
Preliminary communication
https://doi.org/10.3326/pse.43.3.3
The behavior of U.S. States’ debts and deficits
Maria Cornachione Kula
; Gabelli School of Business, Roger Williams University, Bristol, USA
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.
Keywords
fiscal policy; fiscal sustainability; public debt; budget deficits
Hrčak ID:
225237
URI
Publication date:
14.9.2019.
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