Bullettin n. 1/2011
June 2011
CONTENTS
  • Section A) The theory and practise of the federal states and multi-level systems of government
  • Section B) Global governance and international organizations
  • Section C) Regional integration processes
  • Section D) Federalism as a political idea
    • Steven G. Craig, Edward C. Hoang
    State government response to income fluctuations: Consumption, insurance, and capital expenditures
    in Regional Science and Urban Economics , Volume 41, Issue 4 ,  2011
    This paper analyzes state government response to changes in the underlying economy with a view to determining whether, and to what extent, state governments respond to economic fluctuations. Specifically, we build impulse response functions from a panel of US states to examine how states cope with changes in economic conditions. We examine current expenditures, as well as Unemployment Insurance, welfare, and capital spending. Further, we examine how both short and long term debt and state government taxes vary with GSP. Our examination of average state government behavior indicates that states respond slowly to changes in the economy, and that they do not utilize some of the institutional features that are purportedly designed to cushion budgetary impacts. Finally, we find that welfare and UI spending follow separate distinct time paths, but not ones seemingly constrained by institutional barriers.
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