Balanced Budget Requirements and State Spending: A Long-Panel Study

Daniel L. Smith, Yilin Hou

Research output: Contribution to journalArticle

23 Scopus citations

Abstract

This study tests the effects of balanced budget requirements on three measures of state expenditure using data on 48 states for the years 1950-2004. We find that the following rules are effective in constraining expenditures: (1) requiring that the governor submits a balanced budget; (2) placing controls on supplemental appropriations; and (3) prohibiting the carry-over of a deficit from one fiscal year or biennium into the next. The latter two rules exert larger individual effects than the first. All else equal, states can best improve their prospects of reigning in spending by instituting technical rules that govern budgetary outcomes, as opposed to political rules that dictate how the budget is assembled and approved.

Original languageEnglish (US)
Pages (from-to)1-18
Number of pages18
JournalPublic Budgeting and Finance
Volume33
Issue number2
DOIs
StatePublished - Jun 1 2013
Externally publishedYes

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Public Administration

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