Home Random Page


CATEGORIES:

BiologyChemistryConstructionCultureEcologyEconomyElectronicsFinanceGeographyHistoryInformaticsLawMathematicsMechanicsMedicineOtherPedagogyPhilosophyPhysicsPolicyPsychologySociologySportTourism






Changes in Spending

The biannual Fiscal Survey of States published by the National Association of State Budget Officers publishes detailed information on state budgets. We use the data on spending and tax changes from this survey in this section. As we have already mentioned, spending and tax behaviour are important tools of fiscal policy that are often politically contentious. Our goal here is to detail the fiscal behaviour of states following the crisis and reveal the determinants of such behaviour.

State Spending Measures: FY 2008-2009

Despite the beginnings of the economic recession, states were not expecting the economic stress that would develop throughout the fiscal year in 2008. About half of states increased their general fund spending from FY 2008 to FY2009. The average change in spending across the US from FY2008 to FY 2009 was -1.5. %. The regression reveals that the political party of the state governor is significant in explaining the change in spending from FY2008 to FY2009, as well as the variables GDP per capita in 2008 and the percent of population with a bachelors degree or higher. The regression shows that a greater GDP per capita of 1000$ leads to a 0.5% increase in spending. Also, the coefficients for republican governors (-3.97) and education (-0.86) imply that states with republican governors and with a better educated population were less likely to increase spending from FY 2008-2009. The variable stimulus opp, pertaining to whether the state governor expressed reservations about the stimulus funds, is insignificant.. The full table of results are below.

 

Table 1.4

Regression results for State spending change FY 2008-2009

Source SS df MS Number of obs =
      F( 7, 42) = 2.70
Model 669.245555 7 95.6065078 Prob > F = 0.0210
Residual 1487.30325 42 35.4119821 R-squared = 0.3103
      Adj R-squared = 0.1954
Total 2156.5488 49 44.0112 Root MSE = 5.9508
         
         
spendin~2009 Coef. Std. Err. t P>t [95% Conf. Interval]
         
gov_rep -3.973551 1.998443 -1.99 0.053 -8.006572 .0594705
popurban -.0035789 .0749143 -0.05 0.962 -.154762 .1476042
gpdperc~2008 .0005261 .0002217 2.37 0.022 .0000787 .0009735
bachelorde~t -.8656219 .2892553 -2.99 0.005 -1.449363 -.2818811
uempl_2008 -1.016082 .9343271 -1.09 0.283 -2.901631 .8694662
unempl_cha~e -.8351096 .8402762 -0.99 0.326 -2.530856 .8606365
StimulusOPP -.0955527 2.444293 -0.04 0.969 -5.028335 4.83723
_cons 11.16831 7.269579 1.54 0.132 -3.502296 25.83891
         

State Spending Measures: FY 2009-2010



From FY2009 to FY2010, the average change in spending was -2.3% for the US states, which is significantly lower than the FY2008 to FY2009 change at -1.5% the year before. This is most likely due to the increasing economic stress in 2009. Changes in a state’s unemployment rate are not good predictors of changes in spending. The average spending change for Republican states is -3.77%, compared to -1.09% for Democratic states. Partisanship of the state governor has no significant effect. Interestingly, in contrast to the results for FY08-09 changes, the only variable that is significant for FY09-10 is ‘stimulus opp’, a dummy variable with the value of ‘1’ if the governor spoke out against the stimulus funds and 0 if they did not. With a coefficient of -6.76, if a governor spoke out against the stimulus funds it is much more likely to have lowered its spending in 2010. It is also interesting that this variable is insignificant in relation to spending changes in 2009. Clearly the crisis caused the determinants of fiscal policy to change, and from what we observe from the data, there was less cohesion in terms of predictability of behaviour post crisis. The full regression results are below.

 

Table 1.5


Date: 2016-04-22; view: 523


<== previous page | next page ==>
The political debate surrounding state budgets and the ARRA | Regression results spending change FY2009-2010
doclecture.net - lectures - 2014-2024 year. Copyright infringement or personal data (0.009 sec.)