Abstract
The fifty U.S. states employ a wide variety of fiscal institutions designed to constrain state tax and expenditure policy. Some, such as balanced budget requirements and supermajority rules for tax increases, have been proposed for the federal government. Others, such as budgetary line-item-veto authority have even been enacted by Congress, but have since been ruled unconstitutional at the federal level. Advocates typically point to the states as examples from which federal policy makers can learn, but to date there is very little systematic evidence on the effectiveness of these state institutions, either individually or in concert. Furthermore, what evidence exists struggles to deal with two difficult empirical problems: the endogenous nature of the fiscal institutions, and their interactions with one another. This paper describes six of the most important state-level fiscal institutions, presents existing and new evidence regarding their consequences, and discusses empirical strategies for handling their complex endogenous and interactive character.
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Knight, B., Levinson, A. (2000). Fiscal Institutions in U.S. States. In: Strauch, R.R., von Hagen, J. (eds) Institutions, Politics and Fiscal Policy. ZEI Studies in European Economics and Law, vol 2. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-4555-2_7
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DOI: https://doi.org/10.1007/978-1-4615-4555-2_7
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