Tag Archives: states

Cities in distress look upward…

We have discussed the idea that evaluating the fiscal health with respect to debt of a particular jurisdiction also depends on the debt of its “dependents” and the situation of other jurisdictions which tax the same base to some extent (see discussion in Clingermayer and Wood (1995)). This NYT article discusses how cities risking bankruptcy may appeal instead to the state for support. What is the potential impact on the incentives facing cities regarding financial management?

Cities in debt turn to states, adding strain
http://www.nytimes.com/2010/10/05/business/05cities.html?_r=1

Clingermayer, JC and BD Wood. 1995. Disentangling Patterns of State Debt Financing. The American Political Science Review 89, no. 1 (March): 108-120.

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Can states do stimulus? Inman’s perspective

Just found this Vox EU site, started by some excellent economists.  Inman is very reputable.  This piece touches on some of the issues we discussed last night re: states are or are not like small open economies.

LINK (ADDED):  http://www.voxeu.org/index.php?q=node/5512

Using states for macroeconomic fiscal policy
Robert P Inman
15 September 2010

What can we learn from US President Obama’s fiscal stimulus? This column argues that channelling the stimulus package through state governments exposed it to agency costs, free-riding problem, and political expediency. As a result, the stimulus has failed to meet its objectives at the state level. The lesson is that fiscal stimulus should be conducted centrally.

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