IDEAS home Printed from https://ideas.repec.org/a/eee/regeco/v98y2023ics0166046222001004.html
   My bibliography  Save this article

State government saving over the business cycle

Author

Listed:
  • Wilson, Matthew

Abstract

State governments in the United States use savings funds to smooth public finances over the business cycle, and these funds respond to federal policy. State savings are positive and precautionary, insuring against adverse shocks. Federal transfers to states react to national business cycles, leaving states exposed to idiosyncratic risk. State governments faced with idiosyncratic and volatile business cycles save more than less risky states. Results suggest that federal fiscal policy is an influential determinant of state fiscal policy, but does not represent a fiscal union of perfect risk sharing.

Suggested Citation

  • Wilson, Matthew, 2023. "State government saving over the business cycle," Regional Science and Urban Economics, Elsevier, vol. 98(C).
    • Handle: RePEc:eee:regeco:v:98:y:2023:i:c:s0166046222001004
    DOI: 10.1016/j.regsciurbeco.2022.103862
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0166046222001004
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.regsciurbeco.2022.103862?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Gabriel Chodorow-Reich, 2019. "Geographic Cross-Sectional Fiscal Spending Multipliers: What Have We Learned?," American Economic Journal: Economic Policy, American Economic Association, vol. 11(2), pages 1-34, May.
    2. Gabriel Chodorow-Reich, 2017. "Geographic Cross-Sectional Fiscal Multipliers: What Have We Learned?," 2017 Meeting Papers 1214, Society for Economic Dynamics.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Carmen Marín-González & Diego Martínez-López, 2024. "Fiscal stabilisation, debt sustainability and public spending in subnational governments. The case of the Spanish regions," Studies on the Spanish Economy eee2024-02, FEDEA.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hollmayr, Josef & Kuckuck, Jan, 2018. "Fiscal multipliers of central, state and local government and of the social security funds in Germany: Evidence of a SVAR," Discussion Papers 28/2018, Deutsche Bundesbank.
    2. Damon Jones & Ioana Marinescu, 2022. "The Labor Market Impacts of Universal and Permanent Cash Transfers: Evidence from the Alaska Permanent Fund," American Economic Journal: Economic Policy, American Economic Association, vol. 14(2), pages 315-340, May.
    3. Kilian Huber, 2018. "Disentangling the Effects of a Banking Crisis: Evidence from German Firms and Counties," American Economic Review, American Economic Association, vol. 108(3), pages 868-898, March.
    4. Boehm, Christoph E., 2020. "Government consumption and investment: Does the composition of purchases affect the multiplier?," Journal of Monetary Economics, Elsevier, vol. 115(C), pages 80-93.
    5. Daniel G. Garrett & Eric Ohrn & Juan Carlos Suárez Serrato, 2020. "Tax Policy and Local Labor Market Behavior," American Economic Review: Insights, American Economic Association, vol. 2(1), pages 83-100, March.
    6. François Geerolf & Thomas Grjebine, 2018. "Property Tax Shocks and Macroeconomics," Working Papers 2018-03, CEPII research center.
    7. Kirill Borusyak & Xavier Jaravel, 2018. "The Distributional Effects of Trade: Theory and Evidence from the United States," 2018 Meeting Papers 284, Society for Economic Dynamics.
    8. Fritz Breuss, 2017. "The United States-Euro Area Growth Gap Puzzle," WIFO Working Papers 541, WIFO.
    9. Pablo A. Gluzmann & Martin M. Guzman & Joseph E. Stiglitz, 2018. "An Analysis of Puerto Rico's Debt Relief Needs to Restore Debt Sustainability," NBER Working Papers 25256, National Bureau of Economic Research, Inc.
    10. Augusto Cerqua & Guido Pellegrini, 2020. "Local multipliers at work," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 29(4), pages 959-977.
    11. Jason P. Brown & Timothy Fitzgerald & Jeremy G. Weber, 2019. "Does Resource Ownership Matter? Oil and Gas Royalties and the Income Effect of Extraction," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 6(6), pages 1039-1064.
    12. Adrien Auclert & Will S. Dobbie & Paul Goldsmith-Pinkham, 2019. "Macroeconomic Effects of Debt Relief: Consumer Bankruptcy Protections in the Great Recession," NBER Working Papers 25685, National Bureau of Economic Research, Inc.
    13. Benjamin Austin & Edward Glaeser & Lawrence Summers, 2018. "Jobs for the Heartland: Place-Based Policies in 21st-Century America," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 49(1 (Spring), pages 151-255.
    14. Marios Karabarbounis & Marianna Kudlyak & M. Saif Mehkari, 2018. "How Much Consumption Responds to Government Stimulus," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
    15. Kilian Huber, 2015. "The Persistence of a Banking Crisis," Discussion Papers 1532, Centre for Macroeconomics (CFM).
    16. Bill Dupor & Guerrero Rodrigo, 2017. "The Aggregate and Relative Economic Effects of Government Financed Health Care," Working Papers 2017-27, Federal Reserve Bank of St. Louis.
    17. Ercolani Valerio & Pavoni Nicola, 2019. "The Precautionary Saving Effect of Government Consumption," The B.E. Journal of Macroeconomics, De Gruyter, vol. 19(1), pages 1-32, January.
    18. Eduardo Amaral Haddad & Natalia Q. Cotarelli & Vinicius A. Vale, 2024. "On the numerical structure of local and nationwide government spending multipliers: what can we learn from the Greek crisis?," Spatial Economic Analysis, Taylor & Francis Journals, vol. 19(3), pages 462-477, July.
    19. Christopher Biolsi, 2019. "Local Effects of a Military Spending Shock: Evidence from Shipbuilding in the 1930s," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 32, pages 227-248, April.
    20. Atanas Pekanov, 2018. "The New View on Fiscal Policy and its Implications for the European Monetary Union," WIFO Working Papers 562, WIFO.

    More about this item

    Keywords

    Fiscal policy; Rainy day funds; Fiscal federalism; Fiscal union; Business cycles; Precautionary savings;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:regeco:v:98:y:2023:i:c:s0166046222001004. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/regec .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.