Fiscal Instability in State and Local Public Finance

Fred C White,Wesley N Musser

doi:10.52324/001c.9964

Abstract

Highlights

The purpose of this article is to present a model of fiscal instability which considers the cyclical behavior of all major budgetary categories in state and local government finance
In this paper fiscal instability is viewed as fluctuation in budgetary cash flows in response to the business cycle
An empirical framework for consideration of fiscal instability can be derived from a definition of budgetary cash flows: (1)S = E R;- E E

Summary

Local Public Finance

The problem of fiscal instability in state and local public finance has re-emerged as a result of the frequent recessions experienced during the past decade. Many state and local governments were unprepared for the depth and duration of these recessions and were forced to ad just tax rates,as well as expenditure patterns[1,pp.57-58].The public finance literature has considerable material related to the problem of tax instability [2, 5, 11 and 14]. The purpose of this article is to present a model of fiscal instability which considers the cyclical behavior of all major budgetary categories in state and local government finance. The model developed in this paper is appHed to an analysis of budgetary in stability problems for the State of Georgia. This empirical application includes a simulation of a recent state fiscal crisis and a consideration of reduction in budgetary instability

CONCEPTUAL MODEL OF FISCAL INSTABILITY IN STATE AND LOCAL BUDGETS

Methods and Data

Natural resources

BUDGET INSTABILITY FOR THE STATE OF GEORGIA

Findings

Budgetary Instability''