Support of State and Local Finance under Persistent Federal Deficits

Jason Seligman

International Advances in Economic Research, 2012, vol. 18, issue 4, 383-395

Abstract: The United States’ federal government subsidizes local public finance through grants. Given projected U.S. deficits, this may prove untenable. Further, a broader range of policy instruments may offer more effective support of local governments. Herein four policies are considered beginning with current policy: federal deficit financed grants, federal placement, federal underwriting, and Federal Reserve System interventions. Options are evaluated in a general framework considering citizen and government objective functions. Policy recommendations are for interventions to specify terms of entry and exit (as with automatic stabilizers), and for initiation of contingency-simulation exercises to determine the potential of options identified herein. Copyright International Atlantic Economic Society 2012

Keywords: Fiscal Federalism; Public Finance; Taxes; Municipal Finance; Fiscal Policy; Monetary Policy; H50; E50; E62 (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1007/s11294-012-9369-9

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