What Stabilizes State General Fund Expenditures in Downturn Years—Budget Stabilization Fund or General Fund Unreserved Undesignated Balance? |
| |
| Authors: | Yilin Hou |
| |
| Affiliation: | Yilin Hou is an Assistant Professor of Public Administration at the Department of Public Administration and Policy, School of Public and International Affairs, The University of Georgia. He holds a PhD degree from the Maxwell School of Syracuse University. His current research focuses on subnational counter-cyclical fiscal policy and policy tools. |
| |
| Abstract: | This article strictly defines the budget stabilization fund (BSF) as a counter-cyclical reserve, and with a panel data set examines the effects of BSF and general fund unreserved undesignated balances (UUB) on stabilizing state general fund expenditure during downturns. The article finds that BSFs bolster spending in lean years: each percentage point increase of BSF balance as a percent of general fund expenditure can minimize negative expenditure gap by a quarter percentage point. But the article does not find evidence that UUB is a counter-cyclical fiscal tool, indicating that wide adoption of BSF may have changed the nature and use of UUB. |
| |
| Keywords: | |
|
|
