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State fiscal reserves: Supplementation and substitution over economic boom and bust years

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  • Christian Buerger
  • Vincent Reitano
  • Ciana Sorrentino

Abstract

During the Great Recession and the start of the COVID‐19 pandemic, practitioners and scholars alike looked to fiscal reserves as a means to overcome fiscal pressure on state budgets. This study builds on the literature exploring the association between budget stabilization funds and unassigned and unreserved balances (UUBs) during economic booms and busts and under different institutional settings. We find that BSFs supplement UUBs during economic booms and substitute for them during economic busts. Institutional rules strongly influence the relationship between both saving instruments.

Suggested Citation

  • Christian Buerger & Vincent Reitano & Ciana Sorrentino, 2022. "State fiscal reserves: Supplementation and substitution over economic boom and bust years," Public Budgeting & Finance, Wiley Blackwell, vol. 42(1), pages 98-118, March.
    • Handle: RePEc:bla:pbudge:v:42:y:2022:i:1:p:98-118
    DOI: 10.1111/pbaf.12311
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    References listed on IDEAS

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    1. Evgeny N. Timushev & Vita A. Yagovkina, 2023. "Reserve Funds in Russian Regions: Factors of Formation and Efficiency Assessment," Finansovyj žhurnal — Financial Journal, Financial Research Institute, Moscow 125375, Russia, issue 5, pages 61-78, October.

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