Home About Latest Browse RSS Advanced Search

Federal Reserve Bank of Boston
Working Papers
Walking a tightrope: are U. S. state and local governments on a fiscally sustainable path?
Bo Zhao
David Coyne
Abstract

This paper develops a new measure of state and local fiscal sustainability called the "trend gap," which is based on socioeconomic and other fundamental factors and removes the short-term influence of the business cycle. The paper estimates the trend gap and finds that the nationwide per capita trend gap has been on a growing path over the past three decades, a different conclusion than found in previous studies. Social insurance and income maintenance programs have played a major role in the growth of the trend gap, while pension and other post-employment benefits (OPEB) plans have become increasingly important in driving it up. In addition, there are large and growing disparities in the trend gap across states.


Download Full text
Cite this item
Bo Zhao & David Coyne, Walking a tightrope: are U. S. state and local governments on a fiscally sustainable path?, Federal Reserve Bank of Boston, Working Papers 13-18, 01 Dec 2013.
More from this series
JEL Classification:
Subject headings:
Keywords: fiscal sustainability; state and local fiscal trends
For corrections, contact Catherine Spozio ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal