Recalibrating Policy Orthodoxy: The IMF Since the Great Recession

This special issue reviews patterns of policy stability and change at the International Monetary Fund (IMF) since the Great Recession and attempts to explain their causes. The contributors show that the crisis ignited a reassessment regarding how the IMF would position itself as a pivotal player in global economic governance. Some new ideas and evidence definitely found their way into IMF decision making, but this process was often tempered by the nature of the institution and the powerful interests that control its governing structure. Where change did occur, its causal generators could be found in some combination between IMF staff politics, a string of innovations coming from academic and IMF economists, and the emerging economic powers' creative leveraging of institutional fora both within and inside the Fund.     

Back to Basics: The Great Recession and the Narrowing of IMF Policy Advice

This article contributes to the literature on the dynamics of change and continuity in the International Monetary Fund's (IMF's) policy paradigm. The IMF embarked on a process of “streamlining conditionality” during the 2000s, but many observers have argued that the IMF's policy paradigm from the 1990s remains intact. This article examines whether the scope of the IMF's policy advice to borrowers during the Great Recession narrowed in comparison to its advice to borrowers during the heyday of the Washington consensus in the 1980s and 1990s. The article uses qualitative content analysis to establish the frequency of a series of policy dialogue indicators in four sample sets of countries requesting IMF stand‐by arrangements over three decades. The evidence suggests that contemporary IMF policy advice to borrowers continues to stress the importance of fiscal consolidation, with reduced emphasis on promoting the structural economic reforms associated with the Washington consensus era.     

The politics of social spending after the Great Recession: The return of partisan policy making

Prior research shows that the effect of partisanship on social expenditure declined over time in Organisation for Economic Co‐operation and Development (OECD) countries. In this article, the author argues that the 2007/2008 recession resulted in the reemergence of partisan policy making in social spending. This was a result of mainstream parties needing to respond to the growing challenge from nonmainstream parties as well as demonstrating that they responded to the economic crisis by offering different policy solutions. Using a panel of 23 OECD countries, the author shows that since the Great Recession, partisan effects on social spending are once again significant. These effects are more likely to be observed where the salience of the Left–Right dimension is higher. In accordance with classic theories of economic policy making, left‐wing governments are more likely to increase social spending when unemployment is higher and right‐wing governments restrain social expenditure when the budget deficit is greater.     

State Fiscal Strategies for the 1990s: Balancing Budgets in a Recession

The fiscal crunch facing many states in FY 1991 has its rootsin the recession, federal mandates, election-year politics,and rapid growth in spending for Medicaid and corrections. Southernand midwestern states that made drastic cuts in response tothe 1981–1982 recession have fared relatively well, butstates in the Northeast have faced tax increases, layoffs, cutsin services, and prolonged conflict over state budgets. Althoughthe tax revolt has not led to appreciably lower taxes, it hasmade raising taxes more difficult, and has heralded a shiftto "boutique government," which may create further fiscal problemsin the long run. State tax increases and spending cutbacks mayalso delay recovery from the recession.     

The Impact of State Rainy Day Funds in Easing State Fiscal Crises During the 1990–1991 Recession

This article examines the degree to which rainy day funds eased the fiscal stress experienced by states during the 1990–1991 recession. In the first section, a state fiscal policy of neutrality over the business cycle is used as a benchmark for evaluating the use of budget stabilization funds. The next section looks at data from the last three recessions to see how recessions have affected the taxes and expenditures of states. A measure of degree of fiscal stress experienced by each state during the 1990–1991 recession is then calculated. These results are used to empirically investigate the impact of explicit state rainy day funds in easing state fiscal stress. Next, the article examines whether states that had rainy day funds in 1989 were more likely to have less fiscal stress, and whether the specific deposit and withdrawal provisions of these funds made a difference.     

Varieties of Liberalism: Keynesian Responses to the Great Recession in France and Germany

This article argues that distinctive liberal traditions shaped France and Germany's Keynesian policy responses to the post‐2007 economic crisis. In France, “statist liberalism” privileges an activist state that favors macroeconomic intervention and investment. German “corporate liberalism,” by contrast, is more pluralist and emphasizes the powers and responsibilities of social and economic groups, who are viewed as the fundamental components of the social order. The article argues that these traditions shaped elite interpretations of the crisis and played central roles in defining policy trajectories. They informed a modest French response focused on macroeconomic stimulus that relied on existing income support and a larger German effort centered on a microeconomic strategy of group subsidization. It concludes that these outcomes are inconsistent with traditional institutional accounts and highlights the importance of research on the role of ideas in shaping national responses to economic crises.     

Child Poverty,the Great Recession,and the Social Safety Net in the United States

In this paper, we comprehensively examine the effects of the Great Recession on child poverty, with particular attention to the role of the social safety net in mitigating the adverse effects of shocks to earnings and income. Using a state panel data model and data for 2000 to 2014, we estimate the relationship between the business cycle and child poverty, and we examine how and to what extent the safety net is providing protection to at‐risk children. We find compelling evidence that the safety net provides protection; that is, the cyclicality of after‐tax‐and‐transfer child poverty is significantly attenuated relative to the cyclicality of private income poverty. We also find that the protective effect of the safety net is not similar across demographic groups, and that children from more disadvantaged backgrounds, such as those living with Hispanic or single heads, or particularly those living with immigrant household heads—or immigrant spouses—experience larger poverty cyclicality than those living with non‐Hispanic white or married heads, or those living with native household heads with native spouses. Our findings hold across a host of choices for how to define poverty. These include measures based on absolute thresholds or more relative thresholds. They also hold for measures of resources that include not only cash and near‐cash transfers net of taxes but also several measures of the value of public medical benefits.     

The Effects of Political and Fiscal Incentives on Local Government Behavior: An Analysis of Fiscal Slack in China

This study examines the determinants of fiscal slack from the perspective of Chinese local government officials. Given China's rapid economic growth over the past 30-plus years, Chinese local governments reportedly hold huge slack resources that attract public scrutiny. In an effort to improve their fiscal performance, some localities recently established budget stabilization funds, following a top-down initiative. However, it remains unclear to what extent fiscal slack has accumulated and which factors affect slack resource levels of Chinese local governments. By employing a panel dataset (249 prefecture-level cities, 1999–2009), this study finds that political and fiscal factors exert significant influence over local officials’ decisions about slack resource levels. The findings of the study bear implications for establishing fiscal rules and improving the performance of sub-national governments in China and other countries.     

Asian American Mobilization: The Effect of Candidates and Districts on Asian American Voting Behavior

Political Behavior - While numerous studies have examined the effect of a co-ethnic candidate on the ballot for African Americans and Latinos, Asian Americans remain understudied in this regard....     

State Rainy Day Funds and Fiscal Crises: Rainy Day Funds and the 1990–1991 Recession Revisited

The recession of the early 1980s prompted many states to establish budget stabilization (rainy day) funds. Initial examinations of rainy day funds find a limited impact by the funds in alleviating fiscal stress. In this article, we propose an enhanced model of rainy day fund impact. Using data from 48 states for the 1990–1991 recession, our analysis indicates that the presence of a number of structural factors and the maintenance of generally large balances in other funds entering recession helps to alleviate fiscal stress when a state's economy is in recession.     

Is Management Performance a Factor in Municipal Bond Credit Ratings? The Case of Texas School Districts

Municipal bond ratings are an important determinant of interest costs that a bond issuer must pay. The three major bond rating firms profess that economic and management factors are considered in assigning a bond rating. The management component is of particular interest to public administrators because they can exert more direct control over management factors. Management factors have not been studied empirically in the literature because management performance is generally difficult to quantify. However, the public education sector has seen advances in performance measures and at the same time has increasingly relied on municipal bonds to finance construction. The ordered probit estimation provides support that management performance, as measured in the districts performance on standardized test scores and success in student college admission rates, does influence Texas school district bond credit ratings.     

State Saving Behavior: Effects of Two Fiscal and Budgetary Institutions

This paper explores how state saving behavior is affected by two fiscal/budgetary institutions—budget stabilization funds (BSF) and balanced budget requirements (BBR). While adopted for different reasons, BSF and BBR could have significant effects on state savings behavior depending on their design features. We empirically examine the effects of BSF and BBR using a panel data set that covers three business cycles, controlling for budgetary institutions, state economy, social services, politics, and business cycles. The paper finds that adopting BSF and BBR can raise savings by 2 and 3 percentage points, respectively; however, the effects depend crucially on the devices' design.     

Examining the Nature and Magnitude of Intradistrict Resource Disparities in Mid‐Size School Districts

While a growing research base has examined resource disparities across schools within large school districts, the literature has largely overlooked resource allocation in the mid‐size school districts that a large portion of the nation's children attend. In this paper, we measure disparities in teacher resources within four New York State districts and conclude that intradistrict equity is not just a big city problem. We also explore the budgeting processes and mechanisms leading to these disparities, including fund‐based budgeting, grant‐based allocation rules, class size formulae, and ad‐hoc mechanisms. We conclude with policy implications and recommendations for improving intradistrict resource equity.     

On the Competing Definitions of Recession

The long-standing recession definition employed by the National Bureau of Economic Research in its dating of the business cycle is reviewed and challenged. An argument is made in favor of the practical superiority of the common-use alternative of two consecutive down quarters of aggregate output.