The Dynamics of Municipal Fiscal Adjustment
By Thiess Buettner, David E. Wildasin. Social Science Research Network, 2006
172 citations recorded by the source corpus.
The dynamic fiscal policy adjustment of local jurisdictions is investigated empirically using a panel of more than 1000 U.S. municipalities over a quarter of a century. Distinguishing own revenues, grants, expenditures, and debt service, the analysis is carried out using a vector error correction model which takes account of the intertemporal budget constraint. The results indicate that a large part of the fiscal adjustment to changes in any budgetary component takes place by an offsetting change in future expenditures. In addition, the results point to an important role of grants in maintaining budget balance as lower revenues and higher expenditures including debt service are followed by significant increases in grants. Decompositions of the sample according to average city population and initial debt burden reveal significant differences across subsamples. In particular, the role of grants in maintaining budget balance is much more pronounced with large cities whereas small cities tend to rely more on own revenues. Grants also play a more important role in the adjustment of cities with an initially high debt burden.
Subfields: Economics and Econometrics, Political Science and International Relations
View Paper: https://www.semanticscholar.org/paper/ea6ef32460d1482f071c6feb2e1ba488c46d96d2
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Economics and Econometrics
In Political Science and International Relations
Citations in the corpus
- Does fiscal decentralization foster regional investment in productive infrastructure (2013, result): “These authors document a pattern of sub-national fiscal adjustment that has some differences to the one found for the cases of the US and Germany (see, Buettner and Wildasin, 2006, and Buettner, 2009, respectively).”
- Ex-Post Redistribution in a Federation: Implications for Corrective Policy (2006, unknown): “The equilibrium inefficiency continues to be characterized by (14), and the appropriate corrective grant rule is prescribed by (21).”
- Do External Grants to District Governments Discourage Own Revenue Generation? A Look at Local Public Finance Dynamics in Ghana (2012, methodology): “These and other arguments rest strongly on the assumption that the fiscal aspect of decentralistion in fact results in local governments gaining substantial discretion in allocating public resources to competing economic uses in their jurisdiction.”