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Journal Article
Determinants of federal and state community development spending: 1981–2004
The goal of this article is to describe and analyze community development spending at the state level for the period 1981 to 2004. Two components of each state?s housing and community development spending are analyzed: transfers from the federal government that are subsequently spent by states and localities, and expenditures from moneys generated by states and localities. In addition to describing broad trends in public community development spending over time, we also analyze the determinants of both the federal transfers and the state- and local-generated components of total state ...
Working Paper
Take it to the Limit : The Debt Ceiling and Treasury Yields
We use the 2011 and 2013 U.S. debt limit impasses to examine the extent to which investors react to a heightened possibility of financial contagion. To do so, we first model the response of yields on government debt to a potential debt limit "breach." We then demonstrate empirically that yields on all Treasuries rose by 4 to 8 basis points during both impasses, while excess yields on bills at risk of delayed principal payments were significantly larger in 2013. Perhaps counterintuitively, our model suggests market participants placed a lower probability on financial contagion resulting from ...
Discussion Paper
The Restrained Recovery of State and Local Government Payrolls from the Pandemic Recession
On the eve of the outbreak of the COVID-19 pandemic, state and local government (S&L) employment in the U.S. stood at 20 million. In the first three months of the pandemic, S&L payrolls plunged 1.5 million as social distancing reduced the need for many government services, such as in-person schooling, and S&L governments feared sharp revenue declines.
Newsletter
Household energy expenditures, 1982–2005
While energy's share of total expenditures has risen in recent years, it remains below the shares seen in the early and mid-1980s. Furthermore, the impact of the price increases on a household differs, based on the household's specific energy consumption patterns.
Working Paper
The Household Expenditure Response to a Consumption Tax Rate Increase
This study measures the effect of an increase in Japan's Value Added Tax rate on the timing of household expenditures and consumption, which do not necessarily coincide. The analysis finds that durable and storable expenditures surged in the month prior to the tax rate increase, fell sharply upon implementation, but quickly returned to their previous long-run levels. Non-storable non-durable expenditures increased slightly in the month prior to the tax rate increase, but were otherwise unresponsive. A dynamic structural model of household consumption reveals that the observed expenditure ...
Newsletter
Community development spending, 1981–2004
Millions of low-income individuals in the U.S. are aided through community development programs, which are funded by federal, state, and local governments. The authors consider whether federal transfers and expenditures from moneys generated by states and localities respond to state-level trends in unemployment and poverty.
Working Paper
Treasury Safety, Liquidity, and Money Premium Dynamics: Evidence from Recent Debt Limit Impasses
Treasury securities normally possess unparalleled safety and liquidity and, consequently, carry a money premium. We use recent debt limit impasses, which temporarily increased the riskiness of Treasuries, to investigate the relationship between the money premium, safety, and liquidity. Our results shed light on Treasury market dynamics specifically, and debt more generally. We first establish that a decline in the perceived safety of Treasuries erodes the money premium at all times. Meanwhile, changes in liquidity only affected the money premium during the impasses. Next, we show that ...
Working Paper
Fiscal Policy and Aggregate Demand in the U.S. Before, During and Following the Great Recession
We examine the effect of federal and subnational fiscal policy on aggregate demand in the U.S. by introducing the fiscal effect (FE) measure. FE can be decomposed into three components. Discretionary FE quantifies the effect of discretionary or legislated policy changes on aggregate demand. Cyclical FE captures the effect of the automatic stabilizers--changes in government taxes and spending arising from the business cycle. Residual FE measures the effect of all changes in government revenues and outlays which cannot be categorized as either discretionary or cyclical; for example, it captures ...
Discussion Paper
High-frequency Spending Responses to the Earned Income Tax Credit
Many households face large, high-frequency changes in income and have limited financial buffers to smooth their consumption through this income volatility. However, few studies have quantified spending responses to such timing shifts in income due to a lack of high-frequency spending data. We use a new dataset of anonymized daily, state-level spending to study a two-week delay in federal tax refunds with an earned income tax credit (EITC) in 2017.