NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Capital Budgets, Borrowing Rules, and State Capital Spending

James Poterba

NBER Working Paper No. 4235
Issued in December 1992
NBER Program(s):   PE

This paper uses cross-section data on the U.S. states to test the hypothesis that budgeting and borrowing rules affect the level and composition of public spending. It employs a 1963 data set with detailed information on state capital budgeting practices to compare capital spending in states that maintain separate budgets for capital and operating expenditures and states that employ a unified budget It also investigates the impact of financing rules, in particular pay-as-you-go rules for capital projects, on the level of spending. States with capital budgets tend to spend more on public capital, especially if they do not impose pay-as-you-go requirements for financing capital projects.

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Document Object Identifier (DOI): 10.3386/w4235

Published: Journal of Public Economics, 56 (1995), pp 165-187. citation courtesy of

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