Spending Categories Research Articles

CHANGES IN STATE GOVERNMENT FINANCES IN THE 1980s

This article examines changes in state revenue and spending in the 1980s, with particular attention to the period from 1986 to 1989, and discusses likely developments in the 1990s. It incorporates four approaches that can help to improve the policy relevance of research about state-local finances: (1) disaggregating trends in spending, revenue, and different categories of government to a greater degree than usual; (2) employing fiscal data from sources that are often overlooked, particularly sources other than the U.S. Department of Commerce; (3) analyzing both discrete policy actions and changes that occur automatically because of the dynamics of the tax or spending system; and (4) being sensitive to shifts in trends over time.

Were Businessmen Afraid of FDR? A Comment on Mayer and Chatterji

where X equals one of six categories of investment spending and the S's are dummy variables representing the periods during which the political shocks were thought to have had their influence. The test of the importance of the political shocks consisted of examining the t-statistics for the dummy variables. They found that none of the five negative shocks had a statistically significant (at the 1 percent level) effect on any of the six categories of investment spending. The only result consistent with the hypothesis was that the sole positive shock-the 1938 election-had a statistically significant effect on one category of investment spending. Mayer and Chatterji rejected [tihe hypothesis that political shocks were significant factors in generating the low level of investment in the 1930s.3 There are, however, several problems with their analysis. Their formulation of the political explanation for low investment specifies that it resulted from the shock of specific events during the New Deal period. A more common formulation has the low investment resulting more from a general political demoralization. Joseph Schumpeter provided the classic discussion:

Regional variations in the financing of primary education in Zambia

This paper deals with regional variations in the financing of primary education in Zambia. The model of analysis classifies public and private modes by central and peripheral modes of educational financing. A major advantage of the model is that it facilitates regional analyses of variations with regard to different categories of spending. The study found evidence of significant disparities between regions of Zambia in terms of recurrent expenditure on primary education by the central government, as well as with respect to the funds available to regions for the financing of non-salary related items. Also, the results show the inadequacy of using the global unit cost as an overall index of educational quality.

Influences on Executive and Congressional Budgetary Priorities, 1955–1981

A reduced form equation system is used to analyze the influence of economic, political, and institutional influences on the budgetary priorities of the executive branch and Congress during fiscal 1955–81. Three related issues are considered: the extent to which political and macroeconomic factors affect priorities; the degree of interdependence among the components of the federal budget and between spending and revenues; and differences between the executive branch and Congress with respect to these issues. Both types of interdependence are present within both executive branch and congressional budgeting, although this interdependence is stronger within the executive branch. The influence of economic conditions on budgetary outcomes is strong but varies considerably across spending categories. There is no evidence of apolitical business cycle. Political variables exert a modest influence on the budgetary outcomes examined; differences between Democratic and Republican budgetary policies, as well as differences in the budgetary priorities of different presidential administrations, are small by comparison with the differences between executive and congressional policies.

Regional Incidence of Agricultural Policy: The Case of Switzerland

Agricultural expenditure is one of the largest categories of spending in the Swiss federal budget. Yet little is known about the transfer volume and its spatial effects. In this article the regional monetary incidence of the federal agricultural policy, including both the performance and the financial side, is investigated. The calculations show that lowlands receive a much greater average transfer than the mountain areas, measured per farming unit or by agricultural worker. The relative burden of the financing is greater in mountain areas than in the lowlands. Examination of the distribution of the burden according to income groups reveals a regressive effect. The financing of the Swiss agricultural policy cannot be called a social policy—neither for Switzerland as a whole nor from a regional perspective.

Military Spending and the US Defense Industry: Regional Patterns of Military Contracts and Subcontracts

Military expenditure is the largest category of discretionary spending in the US federal budget. As such, its spatial patterns are also among the most concentrated. An analysis of recent defense spending data indicates that ten to fifteen states receive between them at least 70% of military contracts, and higher proportions of high-technology and research-related contracts. Examination of subcontracting data reveals that little wider dispersion of defense spending occurs to states outside the core areas in the West, on the East Coast, and in a few interior locations.

Comparison of the Economic Impacts of Six Growth Centers on Their Surrounding Rural Areas in Asia

The economic impacts of six growth centers on their surrounding rural areas are examined and compared. The six growth centers are: Chiangmai (Thailand), Surabaya (Indonesia), Jaffna (Sri Lanka), Mariveles (Philippines), Kandy (Sri Lanka), and Taxila-Wah (Pakistan). An evaluation is attempted of the spread or trickle-down process in the six case studies, as reflected by the income generated in each growth center and the income multipliers obtained in the surrounding rural areas. The hypothesis advanced for testing is that the spending generated by the different sectors of the economy tends to spread unevenly within the growth space, being greater in the zones nearer to the center than further away from it, and that the income multipliers so derived have only a negligible or no impact in the rural areas. It is further postulated that the income generated by the spending category in the growth center and the income multipliers obtained are independent of the size of the center. The results of the six case studies support, in general, the above hypothesis with regards to the predominance of backwash to income spread in the peripheries of the growth centers. The size of the center does not seem to have a bearing on the magnitude of the income generated or of the multipliers obtained in the surrounding rural areas.

The Illusion of Choice: Defense and Welfare in Advanced Industrial Democracies, 1948-1978

Research on the tendency of governments to trade off welfare spending for defense has generated diverse and often contradictory findings. This study attempts to clarify the issue of trade-offs by examining expenditure patterns since 1948 for the four major NA TO allies: United States, United Kingdom, Federal Republic of Germany, and France. When viewed from the perspective of long-term trends in shares of outlays, trade-offs are evident. When short-term changes in expenditure, which are more germane to the potential for one spending category to benefit at the expense of the other are studied, no pattern of trade-off can be detected. A three-equation model is estimated to control for the variety of possible determining factors of public resource allocation. In none of the four nations does a pattern of trade-off emerge, except in periods of wartime or postwar reconstruction. These findings are consistent with the ability of governments to finance new spending through either increased taxes or larger budget deficits. The growing disinclination to use these methods, however, suggests that the potential for trade-offs has perhaps reappeared in the 1980s.

Demands for public spending: An attitudinal approach

This paper develops a conceptual model of public spending demands applicable to attitudinal data on public spending demands and demonstrates its usefulness by estimating qualitative demand equations for six public spending categories: education, welfare, housing, health, highways, and defense. The estimation, based on a data set constructed by merging the 1973 Survey of Consumer Attitudes and Behavior with relevant government data, reveals that tax-prices, private benefit measures and socio-demographic characteristics are instrumental in explaining differences in the public spending demands among individuals.

THE STRUCTURE OF HOUSEHOLD SPENDING IN SOUTH AMERICAN CITIES: INDEXES OF DISSIMILARITY AND CAUSES OF INTER‐CITY DIFFERENCES

Household budget data collected in 1966–1971 in eleven cities in six South American countries are used to define individual mean budget structures (means of budget shares across households). These structures are then compared by indexes of dissimilarity, calculated for the entire budget and also for major components: food, animal protein foods, nonfood, and housing and clothing. Differences among cities in real income account for much of the difference in the share of the consumer budget devoted to food, which in turn is a principal source of overall budget dissimilarity. Within the food and nonfood budgets separately, income is of somewhat less importance; prices and preferences become more significant. Budget structures tend for this reason to be similar for cities in the same country. The structure of nonfood spending also varies markedly between coastal and interior cities, largely because of differences in housing costs. The available price data account for dissimilarities which depend on the price of a single large category of spending, but they do not help explain structural differences involving many categories: prices seem more important for nonfood than for food expenditures. Regression analysis is used to weigh the importance of each variable contributing to dissimilarity.

A new approach to the demand for public goods

The individual demand for public goods is measured by a new survey research instrument which permits respondents to make hypothetical expenditure and tax recommendations with moveable penny coupons. Because each respondent faces an identical coupon budget constraint, it may be expected that observed expenditure and tax recommendations represent individual maximum utility. The instrument was applied to a random sample of 1000 residents of North Carolina. Statistical analysis of the resultant data indicates significant socio-economic differences in the preferences for particular spending and tax categories.

The Debt-Expenditure Hypothesis and Residential Construction

This paper is devoted to an empirical examination of the debt-expenditure hypothesis as it applies to residential construction. To test this hypothesis residential construction and expenditures are analyzed to see whether they bear any consistent relation to either the flow of mortgage lending or changes in mortgage debt outstanding. The bulk of the paper is devoted to examining the regressions of a number of alternative construction-expenditure variables on associated debt variables; in these regressions residential construction or expenditure is the dependent variable while mortgage lending or debt is the independent variable. The debt-expenditure hypothesis asserts that categories of capital spending, particularly expenditures that are large relative to the income, saving, or net worth of the economic units involved, require corresponding increments of debt or tend in practice to be associated with such debt increases. This is sometimes rationalized on the grounds that the distribution of capital outlays by economic units does not match the distribution of saving so that the expenditures cannot be made without borrowing and the resulting increase in debt. In its simplest version, the hypothesis states that the expenditure-debt ratio is constant or, more generally, that expenditure is a linear function of debt. In discussions of national housing policy, especially particular housing bills, the debt-expenditure hypothesis is sometimes used to justify measures liberalizing mortgage lending terms or to adopt new Federal lending programs. Recently, the Senate Committee on Banking and Currency, in its report on S. 3418, urged adop-

The Malthusian Model of Income Determination and Its Contemporary Relevance

A formal representation of Malthus' views on the short-run expansion and contraction of income and employment, as discussed in the Principles, has not, so far as I know, been published. Aside from any pedagogical usefulness inherent in the attempt made here to do this, it might also be worth while to examine the model with a view to its possible relevance for the contemporary scene.Malthus' concern with effective demand produced a classification of the major categories of spending which has interesting implications for the advanced, mixed economies of our time.It will be recalled that his flows of spending are set up somewhat as follows:1. Consumption by the productive classes, consisting of(a) spending for necessaries by labourers;(b) spending for necessaries, conveniences, and luxuries by capitalists.2. Investment spending (chiefly by capitalists), composed of(a) circulating capital inputs, mainly necessaries contained in the wages fund;(b) fixed capital inputs.3. Spending by unproductive consumers, largely for conveniences, luxuries, and non-material personal services, that is, by(a) private persons out of rentier incomes (e.g., rents and interest income on the public debt);(b) government out of public funds raised through taxation or borrowing.4. Foreign demand.

The Stabilization of Investment in Two Public Utility Industries

in investments, may not be so fully acceptable. Certainly it can be argued that attempts to stabilize consumption directly, i.e., other than by means of controlling investment, should have equal place with, perhaps a place even ahead of attempts to stabilize investment directly. What is needed of course is a broad approach to the problem of cyclical instability which will involve the use of many different tools of economic policy. But this does not make unnecessaryindeed it makes all the more necessarya careful study of each of the various categories of total spending in order to determine the action, if any, which can be taken to stabilize it. To the extent that any particular category of investment or consumption can be stabilized, the problem of cyclical instability will be lessened (unless, of course, the policy which stabilizes one sector destabilizes