Exploring the Impacts of Balanced Budget Requirements on Revenue Forecasting Error: Evidence from the U.S. State Governments
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This study empirically investigates the effects of balanced budget requirements on state revenue forecasting accuracy using panel data on 40 states between 2004 and 2015 of the U.S. Based on the comprehensive measure of balanced budget requirements, empirical results of this study find that balanced budget requirements have a significant effect on revenue forecasting error. More importantly, the results suggest that the effects of balanced budget requirements vary across different legal provisions. While the political provision of requiring the legislature to submit a balanced budget has a positive effect on lowering revenue forecasting error, two technical provisions—placing controls on supplemental appropriations and not allowing deficit carry-over—presents the opposite effect. The findings of this study present critical implications and cautious lessons for potential dialogue of incorporating balanced budget requirements in both central and local governments’ budgeting process.
Abstract
This study empirically investigates the effects of balanced budget requirements on state revenue forecasting accuracy using panel data on 40 states between 2004 and 2015 of the U.S. Based on the comprehensive measure of balanced budget requirements, empirical results of this study find that balanced budget requirements have a significant effect on revenue forecasting error. More importantly, the results suggest that the effects of balanced budget requirements vary across different legal provisions. While the political provision of requiring the legislature to submit a balanced budget has a positive effect on lowering revenue forecasting error, two technical provisions—placing controls on supplemental appropriations and not allowing deficit carry-over—presents the opposite effect. The findings of this study present critical implications and cautious lessons for potential dialogue of incorporating balanced budget requirements in both central and local governments’ budgeting process.
참고문헌 (45)
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