Article

Public Choice

, Volume 145, Issue 1, pp 57-79

Do state balanced budget requirements matter? Testing two explanatory frameworks

  • Yilin HouAffiliated withDepartment of Public Administration and Policy, School of Public and International Affairs, The University of Georgia Email author 
  • , Daniel L. SmithAffiliated withRobert F. Wagner Graduate School of Public Service, New York University

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Abstract

Balanced budget requirements (BBRs) affect all aspects of financial operations. Previous studies relied on characterizations that highlight a constitutional-statutory distinction. Hou and Smith (Public Budgeting & Finance 26(3):22–45, 2006) instead propose a political-technical construct. This article uses probit estimation, six measures of balance, and long panels to test which framework offers more explanatory power. The findings suggest that BBRs matter to varying degrees. Technical requirements exert bigger effects than political ones, the effects are more obvious on narrower than broader measures of balance and in the later phases of the budget cycle, and the political-technical construct offers more explanatory power than the constitutional-statutory distinction.

Keywords

Budgeting Institutions Fiscal policy Balanced budget requirements

JEL Classification

H7 H71 H72