Public Choice

, Volume 63, Issue 2, pp 113-123

The determinants of off-budget activity of state and local governments

  • Michael L. MarlowAffiliated withDepartment of Economics, California Polytechnic State University
  • , David JoulfaianAffiliated withOffice of Tax Analysis, U.S. Department of Treasury

Rent the article at a discount

Rent now

* Final gross prices may vary according to local VAT.

Get Access


The primary finding of this paper is that the off-budget activity of the public sector is significantly and positively related to on-budget activity by state and local governments. We suggest the following policy implications. One, there appears to be evidence that the composition of total government activity is related to the relative costs of the alternative avenues of providing governmental activity. Future research into determining the nature of the relative cost differences may be one useful means of understanding both the composition of government activity as well as its total size. Two, our ability to measure the “true” size of public sector participation in the economy must go well beyond our attempt here. While we have presented information on one of the important “hidden” elements of public sector participation, we are still a long way from effectively incorporating similar data on legislation, regulations and so forth into our empirical tests. Further research into these issues is clearly warranted.