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Is the Response of State and Local Highway Spending Symmetric to Increases and Decreases in Federal Highway Grants?

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  • Shama Gamkhar

    (University of Texas at Austin)

Abstract

Do states and localities, when faced with cuts in federal highway grants, attempt to maintain spending on existing highway projects with own sources of funding? Current state and local government highway spending is postulated here to respond to federal highway grants of the current fiscal year and up to 2 previous fiscal years. The results of this study provide some evidence of asymmetry. When current federal highway grants are increased, their immediate effect on state and local government highway spending is negligible; their impact on spending comes in later years. In contrast, cutbacks in current federal highway grants result in a drop in current state and local government highway spending. The response of state and local government highway spending to lagged federal highway grants is statistically significant and symmetric with respect to increases and decreases in these grants.

Suggested Citation

  • Shama Gamkhar, 2000. "Is the Response of State and Local Highway Spending Symmetric to Increases and Decreases in Federal Highway Grants?," Public Finance Review, , vol. 28(1), pages 3-25, January.
    • Handle: RePEc:sae:pubfin:v:28:y:2000:i:1:p:3-25
    DOI: 10.1177/109114210002800101
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    References listed on IDEAS

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    Cited by:

    1. Can Chen, 2016. "Banking on Infrastructure: Exploring the Fiscal Impacts of State Infrastructure Bank (SIB) Loans on Leveraging State and Local Transportation Investment," Public Budgeting & Finance, Wiley Blackwell, vol. 36(3), pages 94-113, September.
    2. Phuong Nguyen-Hoang, 2015. "Volatile earmarked revenues and state highway expenditures in the United States," Transportation, Springer, vol. 42(2), pages 237-256, March.
    3. Gamkhar, Shama & Olson, Jerome A., 2001. "Asymmetric responses in economic models," Journal of Policy Modeling, Elsevier, vol. 23(5), pages 553-568, July.
    4. Phuong Nguyen-Hoang & Yilin Hou, 2014. "Local Fiscal Responses to Procyclical Changes in State Aid," Publius: The Journal of Federalism, CSF Associates Inc., vol. 44(4), pages 587-608.

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