TY  - JOUR
AU  - Poterba,James M.
TI  - Budget Institutions and Fiscal Policy in the U.S. States
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 5449
PY  - 1996
Y2  - February 1996
UR  - http://www.nber.org/papers/w5449
L1  - http://www.nber.org/papers/w5449.pdf
N1  - Author contact info:
James M. Poterba
Department of Economics
MIT, E52-350
50 Memorial Drive
Cambridge, MA  02142-1347
Tel: 617/253-6673
Fax: 617/258-7804
E-Mail: poterba@nber.org
AB  - This paper summarizes state balanced budget requirements, and the available empirical evidence on the effect of these rules on state fiscal policies.  Existing state rules differ from many current proposals at the federal level.  They are typically restricted to part of the state budget, they frequently permit short term borrowing, and they lack formal enforcement mechanisms.  The paper also surveys previous research on how anti-deficit provisions affect state fiscal policy.  The available evidence indicates that stringent anti-deficit provisions lead to more rapid adjustment of state taxes and expenditures when fiscal deficits emerge.  This suggests that changing the federal budget process has the potential to affect federal fiscal policy.
ER  -