TY  - JOUR
AU  - Holtz-Eakin,Douglas
AU  - Newey,Whitney K.
AU  - Rosen,Harvey S.
TI  - The Revenues-Expenditures Nexus:  Evidence from Local Government Data
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2180
PY  - 1989
Y2  - July 1989
UR  - http://www.nber.org/papers/w2180
L1  - http://www.nber.org/papers/w2180.pdf
N1  - Author contact info:
Douglas Holtz-Eakin
American Action Forum
1401 New York Ave, NW
Suite 1200
Washington, DC 20005
E-Mail: dholtzeakin@americanactionforum.org

Harvey S. Rosen
Department of Economics
Fisher Hall
Princeton University
Princeton, NJ 08544-1021
Tel: 609/258-4022
Fax: 609/258-6419
E-Mail: HSR@princeton.edu
AB  - This paper examines the intertemporal linkages between local government expenditures and revenues. In the terminology that has become standard in the literature on vector autoregression analysis, the issue is whether revenues Granger-cause expenditures, or expenditures Granger-cause revenues. The main results that emerge from an analysis of fiscal data from 171 municipal governments over the period 1972-1980 are that: 1) one or two years are sufficient to summarize the relevant dynamic interrelationships; 2) there are important intertemporal linkages between expenditures, taxes and grants; and 3) past revenues help predict current expenditures, but past expenditures do not alter the future path of revenues. This last finding is contrary to results that have emerged from previous analyses of federal fiscal data, and hence suggests the need for additional research on the differences in the processes generating local and federal decisions.
ER  -