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Working Paper
Fiscal amenities, school finance reform and the supply side of the Tiebout market
This study asks if local governments which provide a high level of public services per tax dollar attract housing capital. The first portion of the paper examines large shifts in property tax burdens induced by an unusual school finance reform in the state of New Hampshire. The estimates suggest that, in most of the state, communities with a reduced tax burden experience a large increase in residential construction. In the area of the state near the region's primary urban center (Boston), however, the shock clears through a price adjustment--i.e. by capitalizing into property values. The ...
Working Paper
Fiscal policy in the United States: automatic stabilizers, discretionary fiscal policy actions, and the economy
We examine the effects of the economy on the government budget as well as the effects of the budget on the economy. First, we provide measures of the effects of automatic stabilizers on budget outcomes at the federal and state and local levels. For the federal government, the deficit increases about 0.35 percent of GDP for each 1 percentage point deviation of actual GDP relative to potential GDP. For state and local governments, the deficit increases by about 0.1 percent of GDP. We then examine the response of the economy to the automatic stabilizers using the FRB/US model by comparing the ...
Working Paper
School desegregation, school choice and changes in residential location patterns by race
This paper examines the residential location and school choice responses to desegregation of large public school districts. Unique data and variation in the timing of desegregation orders facilitate the analysis. The 16 percent decline in white public enrollment due to desegregation primarily led to migration to suburban districts in the South and increased private enrollment in other regions. Desegregation caused black public enrollment to increase by 20 percent outside the South largely due to population changes. The spatial distributions of responses by race to desegregation orders closely ...
Working Paper
State and local finances and the macroeconomy: the high-employment budget and fiscal impetus
We examine the interplay of the economy and state and local budgets by developing and examining two measures of fiscal policy: the high-employment budget and fiscal impetus. We find that a 1 percentage point increase in cyclical GDP results in a 0.1 percentage point increase in NIPA-based net saving through the automatic response of taxes and expenditures. State and local budget policies are found to be modestly pro-cyclical. Stimulus to aggregate demand is about 0.2 percentage point less following a business cycle peak than it is during the period before the business cycle peak.
Working Paper
The connection between house price appreciation and property tax revenues
This paper explores two aspects of the connection between property tax revenues and house prices. First, I estimate the elasticity of property tax revenues with respect to house prices. This elasticity does not necessarily equal one as governments may adjust effective tax rates to offset changes in property values. Second, I examine the timing of the relationship. Institutional features of the property tax make it unlikely that changes in house prices will immediately influence tax revenues. The results suggest that the elasticity eventually equals 0.4 and that it takes three years for house ...
Working Paper
The housing crisis and state and local government tax revenue: five channels
State and local government tax revenues dropped steeply following the most severe housing market contraction since the Great Depression. We identify five main channels through which the housing market affects state and local tax revenues: property tax revenues, transfer tax revenues, sales tax revenues (including a direct effect through construction materials and an indirect effect through the link between housing wealth and consumption), and personal income tax revenues. We find that property tax revenues do not tend to decrease following house price declines. We conclude that the resilience ...