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Support of State and Local Finance under Persistent Federal Deficits

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  • Jason Seligman

Abstract

The United States’ federal government subsidizes local public finance through grants. Given projected U.S. deficits, this may prove untenable. Further, a broader range of policy instruments may offer more effective support of local governments. Herein four policies are considered beginning with current policy: federal deficit financed grants, federal placement, federal underwriting, and Federal Reserve System interventions. Options are evaluated in a general framework considering citizen and government objective functions. Policy recommendations are for interventions to specify terms of entry and exit (as with automatic stabilizers), and for initiation of contingency-simulation exercises to determine the potential of options identified herein. Copyright International Atlantic Economic Society 2012

Suggested Citation

  • Jason Seligman, 2012. "Support of State and Local Finance under Persistent Federal Deficits," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 18(4), pages 383-395, November.
    • Handle: RePEc:kap:iaecre:v:18:y:2012:i:4:p:383-395:10.1007/s11294-012-9369-9
    DOI: 10.1007/s11294-012-9369-9
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    References listed on IDEAS

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    1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64(5), pages 416-416.
    2. repec:kap:iaecre:v:17:y:2011:i:3:p:258-273 is not listed on IDEAS
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    5. N. Apergis & E. Mamatzakis & C. Staikuras, 2011. "The Greek Sovereign Debt Crisis: Testing for Regime Changes," Working Paper series 16_11, Rimini Centre for Economic Analysis.
    6. Nicholas Apergis & Emmanuel Mamatzakis & Christos Staikouras, 2011. "Testing for Regime Changes in Greek Sovereign Debt Crisis," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 17(3), pages 258-273, August.
    7. William Poole, 2002. "The role of anecdotal information in Fed policymaking," Speech 48, Federal Reserve Bank of St. Louis.
    8. Longstaff, Francis A, 1992. "Are Negative Option Prices Possible? The Callable U.S. Treasury-Bond Puzzle," The Journal of Business, University of Chicago Press, vol. 65(4), pages 571-592, October.
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    Cited by:

    1. Klaas Staal, 2020. "State-level Federal Stimulus Funds and Economic Growth: The American Recovery and Reinvestment Act," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 26(1), pages 33-43, February.
    2. Barbara Klein & Klaas Staal, 2017. "Was the American Recovery and Reinvestment Act an Economic Stimulus?," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 23(4), pages 395-404, November.

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    More about this item

    Keywords

    Fiscal Federalism; Public Finance; Taxes; Municipal Finance; Fiscal Policy; Monetary Policy; H50; E50; E62;
    All these keywords.

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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