State and local finances and the macroeconomy: the high-employment budget and fiscal impetus

Glenn Follette, Andrea L. Kusko and Byron F. Lutz
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Byron F. Lutz: https://www.federalreserve.gov/econres/byron-lutz.htm

No 2009-05, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We examine the interplay of the economy and state and local budgets by developing and examining two measures of fiscal policy: the high-employment budget and fiscal impetus. We find that a 1 percentage point increase in cyclical GDP results in a 0.1 percentage point increase in NIPA-based net saving through the automatic response of taxes and expenditures. State and local budget policies are found to be modestly pro-cyclical. Stimulus to aggregate demand is about 0.2 percentage point less following a business cycle peak than it is during the period before the business cycle peak.

Keywords: Finance, Public; Fiscal policy (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-mac
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: State and Local Finances and the Macroeconomy: The High–Employment Budget and Fiscal Impetus (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2009-05

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