Determinants of pay-as-you-go financing of capital projects: Evidence from the states

Wen Wang, Yilin Hou, William Duncome

Research output: Contribution to journalArticlepeer-review

19 Scopus citations


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 languageEnglish (US)
Pages (from-to)18-42
Number of pages25
JournalPublic Budgeting and Finance
Issue number4
StatePublished - Dec 2007
Externally publishedYes

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Public Administration


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