State Saving Behavior: Effects of Two Fiscal and Budgetary Institutions |
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| Authors: | YILIN HOU WILLIAM DUNCOMBE |
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| Institution: | 1. Department of Public Administration and Policy, School of Public and International Affairs, University of Georgia, 204 Baldwin Hall, Athens, GA 30602‐1615, and;2. Center for Policy Research, The Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244‐1020 |
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| Abstract: | 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. |
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