Fiscal Policy Cyclicality and Growth within the US States : The B.E. Journal of Macroeconomics Jump to ContentJump to Main Navigation
Show Summary Details

The B.E. Journal of Macroeconomics

Editor-in-Chief: Cavalcanti, Tiago / Mertens, Karel

Ed. by Abraham, Arpad / Carceles-Poveda , Eva / Debortoli, Davide / Kambourov, Gueorgui / Lambertini, Luisa / Pavoni, Nicola / Ruhl, Kim / Nimark, Kristoffer / Wang, Pengfei


IMPACT FACTOR 2015: 0.164
5-year IMPACT FACTOR: 0.403

SCImago Journal Rank (SJR) 2015: 0.205
Source Normalized Impact per Paper (SNIP) 2015: 0.317
Impact per Publication (IPP) 2015: 0.222

Online
ISSN
1935-1690
See all formats and pricing

 


Select Volume and Issue
Loading journal volume and issue information...

30,00 € / $42.00 / £23.00

Get Access to Full Text

Fiscal Policy Cyclicality and Growth within the US States

Justin Svec1 / Ayako Kondo2

1College of the Holy Cross,

2Hosei University,

Citation Information: The B.E. Journal of Macroeconomics. Volume 12, Issue 2, ISSN (Online) 1935-1690, DOI: 10.1515/1935-1690.2166, March 2012

Publication History

Published Online:
2012-03-22

This paper exploits differences in the stringency of balanced budget rules across US states to estimate the effect of the cyclicality of fiscal policy on state GDP growth. While most states have passed laws restricting deficits, the nature and strictness of these laws vary greatly. States with more stringent balanced budget restrictions run more procyclical fiscal policy. We use the diversity in these laws as an instrument for the cyclicality of policy. We find evidence that a more counter-cyclical primary deficit increases a state's average growth rate per capita. This effect is robust to a number of alternative specifications. One concrete policy implication of this analysis is that a state could increase its annual growth rate by relaxing its balanced budget restrictions.

Keywords: counter-cyclical fiscal policy; growth; primary deficit

Comments (0)

Please log in or register to comment.