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Diane Publishing Books
Fiscal Rules, What Does the American Experience Tell Us?
Byron Lutz (au); Glenn Follette (au)
This report examines the effect of balanced budget rules on budget outcomes in the U.S. from the mid-1980s through the present. Rules at both the federal level and the state level are considered. Given the relatively short duration of the federal rules and corresponding lack of data points, the authors adopt a narrative approach. Their examination fails to uncover evidence that the statutory rules at the federal level have influenced the size of deficits. The laboratory of the states provides more fertile ground for econometric testing of the influence of balanced budget rules. The authors test the hypothesis that the strength of a state's balanced budget rule influences its response to unanticipated budget shocks. They conclude that rules at the state-level have had a significant influence on budget outcomes. Tables and figures. This is a print on demand report.
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