The Tax-Spend Debate: Time Series Evidence from State Budgets

James Payne

Public Choice, 1998, vol. 95, issue 3-4, 307-20

Abstract: This paper examines the temporal relationship between revenues and expenditures for the forty-eight contiguous states over an annual period 1942 to 1992. Using an error-correction model, the author finds that the tax-spend hypothesis is supported for twenty-four states. The spend-tax hypothesis is valid for eight states while the fiscal synchronization hypothesis is supported for eleven states. The remaining five states failed the diagnostic tests for error-correction modeling. Copyright 1998 by Kluwer Academic Publishers

Date: 1998
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