U.S. State and Local Government Finances Over the Current Cycle
December 1, 1992
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Summary
The recent slowdown in the U.S. economy has led to state and local government tax increases and expenditure cuts that have lowered aggregate demand, in contrast to earlier downturns when the sector provided significant automatic stabilizers. Several explanations for this change are examined, including the role of federal grants, mandates, tax revolts, and compensation. The first three factors are found to be relatively unimportant. There does, however, appear to have been a large change in relative compensation over the 1980s, which can account for much of the deterioration in finances.
Subject: Economic sectors, Expenditure, Fiscal policy, Fiscal stance, Public sector, Revenue administration, Total expenditures
Keywords: aggregate state government, Fiscal stance, local government, local government balance, local government employee, local government sector, local government spending, Public sector, state government, Total expenditures, WP
Pages:
35
Volume:
1992
DOI:
Issue:
112
Series:
Working Paper No. 1992/112
Stock No:
WPIEA1121992
ISBN:
9781451853520
ISSN:
1018-5941
