Although states have long practiced pay-as-you-go in financing their capital projects as a supplement to debt, academia has paid scarce attention to pay-go financing. This study fills in the niche by providing empirical evidence on what determines the use of pay-go in financing capital projects. It develops a model that considers the preferences of both voters and politicians when they make capital financing decisions in a given institutional setting. The empirical results suggest that the use of pay-go is affected by a state's income level, its economic conditions, the presence of a divided government, as well as its budgetary institutions.
|Original language||English (US)|
|Number of pages||25|
|Journal||Public Budgeting and Finance|
|State||Published - Dec 2007|
ASJC Scopus subject areas
- Economics and Econometrics
- Public Administration