Walking a tightrope: are U. S. state and local governments on a fiscally sustainable path?

David Coyne and Bo Zhao

No 13-18, Working Papers from Federal Reserve Bank of Boston

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.

Keywords: fiscal sustainability; state and local fiscal trends (search for similar items in EconPapers)
JEL-codes: H4 H7 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2013-12-01
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Related works:
Journal Article: Walking a Tightrope: Are U.S. State and Local Governments on a Fiscally Sustainable Path? (2017)
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