Great Recession and Fiscal Squeeze at U.S. Subnational Government Level

Author/Editor: Jiri Jonas
Publication Date: July 01, 2012
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: The paper discusses the fiscal impact of the Great Recession of 2007-08 on state and local governments in the United States. It documents the sharp decline in tax revenue and discusses how states responded to close the budget gaps in order to obey the balanced budget provisions. It highligts the procyclical nature of this policy response, provides a brief comparison with subnational policy stances in other advanced economies, and discusses some options for making subnational fiscal policy less procyclical within the framework of current rules.
Series: Working Paper No. 12/184
Subject(s): Economic recession | Government expenditures | Investment | Stabilization measures | Tax collection | Tax revenues

Author's Keyword(s): Fiscal policy | tax policy | local government finance
Publication Date: July 01, 2012
ISBN/ISSN: 9781475505320/1018-5941 Format: Paper
Stock No: WPIEA2012184 Pages: 40
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