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The Fiscal Costs of Public Health Crisis: Lessons from Zika in the United States Public Finance Review Pub Date : 2024-04-17 Yusun Kim, Judith Liu
How do public health crises affect public health spending at different levels of government in a federal system? This study shows that small outbreaks of communicable diseases can have sizeable fiscal impact on federal and state governments through public health insurance and intergovernmental grants. We examine the case of the Zika virus outbreak in the United States using nationwide county-level
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Do U.S. Trade Agreements Affect Corruption in Latin America? A Difference in Difference Analysis Public Finance Review Pub Date : 2024-04-15 Peter Calcagno, Taylor Crawford, Beatriz Maldonado
Free trade is important in the development of good economic institutions. One issue, in particular, is whether free trade agreements (FTA) can reduce corruption. Liberalizing trade while reducing corruption can reinforce moral behavior. We examine FTA between the United States and its Latin American trading partners. Free trade may provide incentives that could possibly result in countries becoming
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Local Autonomy in Education Finance in a Mixed Economy: The Case of Vietnam Public Finance Review Pub Date : 2024-04-13 Phuong Nguyen-Hoang
Allocation mechanisms are crucial to shaping the effectiveness of a country's school finance system. In Vietnam, local authorities make their own decisions about allocating operating resources for pretertiary education. Despite this high level of control, there is a lack of comprehensive studies on how Vietnamese provinces allocate resources for their schools. This study aims to fill this gap by examining
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Complexity and the Tax Code: A Textual Analysis Public Finance Review Pub Date : 2024-03-28 Charles Swenson, Hao Qu, Xiao Song
Using a model from political economy, we predict that U.S. Internal Revenue Code sections and related Treasury Regulations will have more verbiage, complex terms, and cognitive complexity for tax-reducing sections to limit free riding and the scope of tax benefits. Using textual analysis, we find our model's predictions are generally supported using both Code and Regulations from 1997 to 2017. Importantly
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The Effect of Crises on Fiscal and Political Re-Centralization Public Finance Review Pub Date : 2024-03-27 Gustavo Canavire-Bacarreza, Pablo Evia Salas, Jorge Martinez-Vazquez
Economic stability plays a crucial role in any fiscal and political decentralization process. In the face of financial and economic shocks, when revenues and expenditures are reduced, countries may decide to gather resources at the central level creating a re-centralization scenario or may take away devolved powers and centralize political institutions. Using data from 75 countries, we examine the
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Public Financing of Professional Sports Facilities and Drug Asset Forfeiture Public Finance Review Pub Date : 2024-03-18 Benjamin Blemings, Brad Humphreys
Local governments provide many crucial services from limited budgets, yet often subsidize the profitable, private businesses in professional sports leagues in the United States. Policing represents one important public service. Policing typically constitutes large portions of government budgets and also generates revenue through fines and forfeitures. Existing evidence suggests that large municipal
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On the Management of Hidden Artwork: A Public–Private Partnership Approach Public Finance Review Pub Date : 2024-03-12 Claudia Amadei, Marina Bertolini, Luciano Greco
A global trend, represented by the case of Italy, is that of movable cultural heritage hidden – and often not properly recorded – in public museums’ warehouses. Legal frameworks pose limits to privatization in the management of cultural assets. We propose the creation of a regulated market for tradable, long-term concessions of movable artwork to encourage selected private operators to invest in artwork's
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Do Political Leaders Impact Economic Freedom at the Local Level? Evidence from Close Elections Public Finance Review Pub Date : 2024-02-21 Zach Raff, Andrew Swanson, Danielle Zanzalari
This paper examines whether state and local political leaders’ partisan affiliations affect economic freedom at the metropolitan statistical area (MSA) level. Because political leaders’ partisan affiliations likely correlate with unobserved state- and local-level characteristics that also affect the economic freedom levels of MSAs, we use a regression discontinuity design that leverages close elections
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Hiding the Losses: Fiscal Transparency and the Performance of Government Portfolios of Financial Assets Public Finance Review Pub Date : 2023-05-14 Mike Seiferling, Shamsuddin Tareq
The widespread reliance on gross government debt and deficit/surplus as indicators of fiscal performance has too often neglected the role played by other important parts of a government's balance s...
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The Impact of State 529 Plan Tax Incentives on Take-Up and Savings Public Finance Review Pub Date : 2023-05-02 Bradley T. Heim, Ruth Winecoff
This paper examines the impact of the 529 plan tax benefits on plan participation and savings. Using state-level data on tax benefits for plan contributions and on the number of open accounts and t...
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Understanding Forecasting Errors in State Personal Income Tax Revenues: The Role of Capital Gains Public Finance Review Pub Date : 2023-04-20 Asa Ferguson, Liam Marshall, Jonathan C. Rork
Many states face challenges in producing accurate forecasts of tax revenue from personal income. Using data from 1996 to 2019, we look at how growth in the various base components of personal incom...
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Substitution Between Private and Government Consumption in a Currency Area: The Case of the CFA Franc Zone Public Finance Review Pub Date : 2023-04-02 Michel Cyrille Samba, Seabrook Arthur Mveng
The current study aims at investigating the relationship between private and government consumption within CFA franc zone. In fact, since the decade 2000, most of these countries have launched ambi...
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The Ends Against the Middle: The Case of Municipal Golf Public Finance Review Pub Date : 2023-03-22 Xiaoxiao Li, Wen Mao, Peter A. Zaleski, Catherine Kenny
The theory and empirical analysis of the public provision of private goods have primarily considered the provision of education and healthcare. In this paper, we extend the application of the theor...
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Do Subnational Fiscal Rules Reduce Public Investment? The Case of Fiscal Responsibility Laws in India Public Finance Review Pub Date : 2023-02-28 Rahul Pathak
This article examines whether the adoption of deficit targets by subnational governments in India influenced the composition of public spending. Using dynamic panel estimations, this study finds th...
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Local Governments’ Adoption of Innovative Infrastructure Finance Tool: Evidence From Pennsylvania Municipalities Public Finance Review Pub Date : 2023-02-28 Laiyang Ke, Shiqin Liu
State Infrastructure Banks (SIBs) are established to provide low-interest loans and credit enhancements to assist local governments in financing transportation projects. SIB loans, one of their cor...
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The Impact of Coal Activity on Local Revenues for Elementary and Secondary Education in Appalachia Public Finance Review Pub Date : 2023-01-24 Jilleah G. Welch, Matthew N. Murray
Coal mining has a deep history in the Appalachian region, where some local economies have heavily relied on coal production. While coal employment in the region has generally been in a long-term de...
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Public Pension Reform and Credit Quality of State Governments Public Finance Review Pub Date : 2023-01-09 Trang Hoang
The growth of unfunded pension liabilities has raised concern over states’ fiscal sustainability and threatens their ability to access the capital market. Over the past decade, many states have imp...
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If You Give Bureaucrats an Inch, Will They Take a Yard? Lessons from Threshold Regulatory Reform in Italy Public Finance Review Pub Date : 2022-12-12 Massimo Finocchiaro Castro, Calogero Guccio, Domenica Romeo
The role of discretion in public procurement has been the subject of wide debate in regulation literature and practice. Greater discretion potentially may allow for greater efficiency in procuremen...
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Nature versus Nurture in Social Mobility Under Private and Public Education Systems Public Finance Review Pub Date : 2022-11-14 Simon Fan, Yu Pang, Pierre Pestieau
This paper analyzes the roles of innate talent versus family background in shaping intergenerational mobility and social welfare under different education systems. We establish an overlapping-gener...
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Do Countries Really Deviate from the Optimal Tax System? Public Finance Review Pub Date : 2022-11-14 Cristian F. Sepulveda
One of the main goals of the literature on optimal tax systems is to reduce the gap between the highly stylized theory of optimal taxation and the practice of fiscal policy reform. Unfortunately, h...
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Effect of International Commodity Price Shocks on Public Finances in Africa Public Finance Review Pub Date : 2022-11-14 Dakpoulé Da, Mahamadou Diarra
This paper empirically investigates the macroeconomic responses to commodity price shocks with a focus on fiscal variables in a sample of thirty-three African commodity-dependent countries. Using t...
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Corporate Effective Tax Rates for Research and Policy Public Finance Review Pub Date : 2022-11-07 Petr Janský
How much companies pay in corporate income taxes is often better captured by effective tax rates (ETRs) rather than by statutory ones. Economists further distinguish between those modeled using the...
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The Effect of Property Assessment Reductions on Homeownership: A Quasi-Dynamic Economic Analysis Public Finance Review Pub Date : 2022-11-01 Fernanda Alfaro, Dusan Paredes, Mark Skidmore
This article evaluates the impacts of reductions in residential effective tax rates on homeownership in Detroit, Michigan. The decline in effective tax rates was driven by a citywide reassessment t...
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Effects of Split-Rate Taxation on Tax Base Public Finance Review Pub Date : 2022-11-01 Zhou Yang, Zackary B. Hawley
Municipalities debating land value taxation or split-rate taxation need empirical evidence to understand how the transition of property tax regimes will affect their tax base. Using a valuable data...
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Precautionary Social Planning Public Finance Review Pub Date : 2022-10-26 James Feigenbaum, Tong Jin
It is a truism of neoclassical economics that a sufficiently high savings rate will be bad if it is dynamically inefficient. Here we consider a Solow model in which households follow a savings rate...
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Capital and Crime–Corruption Nexus in the Shadow of the Law: A Theoretical Analysis of Public Policy Public Finance Review Pub Date : 2022-10-13 Rohan Kanti Khan, Sushobhan Mahata, Ranjanendra Narayan Nag
Corruption is a symptom of wider political dynamics intertwined with sectors prone to criminal activities. This arises due to the laxity of legal enforcement or a dysfunctional political system. Th...
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The Impact of State Fiscal Policy on States’ Resilience Exiting the Great Recession Public Finance Review Pub Date : 2022-10-13 Peter Prescott, Kathy Paulson Gjerde
This study employs a state-level model of recovery and a comprehensive set of tax- and expenditure-related variables to explore the effect that the states’ fiscal policy decisions had on their reco...
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Tax Evasion, Behavioral Microsimulation Models and Flat-Rate Tax Reforms: Analysis for Italy Public Finance Review Pub Date : 2022-09-25 Andrea Albarea, Michele Bernasconi, Anna Marenzi, Dino Rizzi
It is sometimes argued that a flat-rate tax reform can reduce tax noncompliance. The argument is, however, inconsistent with the so-called Yitzhaki’s puzzle of the classical expected utility (EU) m...
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Split-Rate Taxation and Business Establishment Location: Evidence From the Pennsylvania Experience Public Finance Review Pub Date : 2022-09-25 Andrew Hanson
This article estimates the relationship between business establishment location and split-rate property taxation. Using variation in split-rate adoption and intensity by municipalities across Penns...
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Decentralization and Progressive Taxation Public Finance Review Pub Date : 2022-09-25 Simon Berset, Mark Schelker
The traditional literature on fiscal federalism prescribes centralization of redistributive tasks to avoid welfare- or tax-induced migration. More recent work shows that even if the redistributive ...
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Government Welfare Policy Under a Skilled-Biased Technological Change Public Finance Review Pub Date : 2022-09-20 Michel Strawczynski, Oren Tirosh
In a world where machines replace unskilled work, an active labor market policy—represented by the combination of an optimal Earned Income Tax Credit (EITC) and income maintenance for the unemploye...
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Business Regulations and Between-City Migration Public Finance Review Pub Date : 2022-09-20 Alicia Plemmons, Sriparna Ghosh
Local governments compete for new residents by creating institutional frameworks that are attractive to such residents. As 13 percent of the US moves each year, policies that affect the ease of doi...
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Ideology, Party, and Opinions of Taxes on the Rich and Middle Class in the United States: Evidence from the 2016 General Social Survey Public Finance Review Pub Date : 2022-09-20 Steven T. Yen, Ernest M. Zampelli
This paper examines attitudes toward taxes on the rich and middle class in the United States with emphasis on the impacts of political ideology and party identification. Using the 2016 General Soci...
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The Effect of an Allowance for Corporate Equity on Capital Structure: Evidence From Austria Public Finance Review Pub Date : 2022-09-20 Matthias Petutschnig, Silke Rünger
We contribute to the empirical literature on the debt bias of corporate income taxation through a firm-level evaluation of the allowance for corporate equity (ACE) in Austria. We find that the Aust...
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Corruption and the Burden of Regulation: National, Regional, and Firm-Level Evidence Public Finance Review Pub Date : 2022-08-24 Michael Breen, Robert Gillanders
Does corruption ease the burden of regulation? We test this question using survey data on business managers’ experience in dealing with regulation and corruption. We find that there is substantial ...
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Breaking Wagner's Law: Which Countries Have the Most Limited Government? Public Finance Review Pub Date : 2022-08-04 Ryan H. Murphy
Which countries have the world's smallest and the world's largest governments? One-fifth of the Economic Freedom of the World index is a subindex scoring the size of government for countries across...
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Who Lacks Pension Knowledge, Why and Does it Matter? Evidence From Swedish Retirement Savers Public Finance Review Pub Date : 2022-08-04 Mikael Elinder, Johannes Hagen, Mattias Nordin, Jenny Säve-Söderbergh
Recent pension reforms have shifted a larger responsibility towards savers. Individuals therefore need better knowledge of the rules and incentives embedded in the pension system to adequately save...
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The Distributive Impact of the Luxembourg Tax-Benefit System: A More Comprehensive Measurement Public Finance Review Pub Date : 2022-08-04 Vincent Vergnat, Conchita D’Ambrosio, Philippe Liégeois
This article studies the distribution of income in Luxembourg by integrating two aspects that have been previously neglected: indirect taxation and in-kind transfers. The integration of the latter ...
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The Fiscal Impact of the COVID-19 Pandemic on Subnational Governments: The Case of Russia Public Finance Review Pub Date : 2022-06-21 Michael Alexeev, Andrey Yushkov
This paper examines the fiscal consequences of the COVID-19 pandemic for subnational governments. In particular, we study how the pandemic affected the Russian regions in terms of budget revenues, ...
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The Curse of Historic Resources Public Finance Review Pub Date : 2022-06-21 Russell S. Sobel, J. R. Clark, Reagan N. Sobel
There is a well-documented “natural resource curse” whereby the presence of immobile natural resources leads to weaker economic performance and a deterioration in the quality of economic institutions and governance. We propose the novel hypothesis that a similar curse exists for historic resources such as the Egyptian Pyramids, Roman Colosseum, and Gettysburg Battlefield. These captive wealth-producing
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The Fiscal Common Pool Problem, Municipal Mergers, and Spillovers Public Finance Review Pub Date : 2022-06-21 Nobuo Akai, Tsuyoshi Goto
Mergers of local governments, commonly referred to as municipal mergers, have been widely implemented to internalize spillover effects. Many empirical studies point out that municipalities change the intertemporal budget allocation by increasing their debt issuance before mergers and they consider that this debt issuance is induced by the “fiscal common pool problem” because of pooled budgets after
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The Effect of Presidential Particularism on Economic Well-Being: A County-Level Analysis Public Finance Review Pub Date : 2022-05-25 Jamie Bologna Pavlik, Maria Tackett
Does it pay to be a locale of political importance? Political business cycle theory predicts that the executive has an incentive to manipulate policy to increase the chances of their party remaining in office. In particular, core counties (those that vote for the current administration) have been shown to enjoy disproportionately higher federal spending. In this paper, we explore how this funding affects
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Accounting for the State Fixed Effect for Municipal Cash Reserves: The Role of Financial and Institutional Variables Public Finance Review Pub Date : 2022-05-25 Kawika Pierson, Jon C. Thompson, Fred Thompson
One of the most important predictor variables in multistate studies of American municipal cash reserves is the state in which a municipality is located, and to date no research has explored why. In this paper, we show that two broad categories of variables can account for a large fraction of this puzzle. Average differences in financial variables and state-to-state institutional differences combine
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Growth and Welfare Implications of Mortality Differentials in Unfunded Social Security Systems Public Finance Review Pub Date : 2022-05-25 Mark C. Kelly
Several recent studies have examined the steady-state welfare implications of mortality differentials within unfunded Social Security systems, concluding that these differentials undermine the progressivity of the system and make society worse-off relative to alternative public pension schemes. This study is the first to systematically investigate the long-run implications of mortality inequality within
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Age Demographics and the Tax Mix in US States Public Finance Review Pub Date : 2022-05-04 Cameron A. Shelton
Countries with higher old-age dependency rates tend to rely less heavily on income taxes and more heavily on consumption taxes. We investigate this relationship in a panel of US states. To address endogeneity in a sub-national context due to migration, we use lagged in-state births to develop a new instrument for old-age dependency which is shown to be strong and relevant to the results. In an unbalanced
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The VAT at 100: A Retrospective Survey and Agenda for Future Research Public Finance Review Pub Date : 2022-05-04 Joel Slemrod, Tejaswi Velayudhan
We take stock of what is known about the consequences of actual value-added tax (VAT) systems, nearly 100 years since its conception. We benchmark it to the tax it most often replaced—the retail sales tax (RST). We do this not because we advocate a return to the RST, but because it allows us to evaluate the performance of two tax instruments in actual practice instead of comparing them to their idealized
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Official Welcome to New Co-Editor of Public Finance Review Public Finance Review Pub Date : 2022-05-04 T. Scott Findley
I would like to announce and welcome Gary Wagner as the new Co-Editor of Public Finance Review (PFR). Gary and I will co-share editor-in-chief responsibilities going forward. He is a highly qualified researcher to fill this position with a long history of conducting and publishing public finance and public economics research in many of the best journal outlets in these areas, such as Journal of Economic
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How Would a Permanently Refundable Child and Dependent Care Credit Affect Eligibility, Benefits, and Incentives? Public Finance Review Pub Date : 2022-04-21 Gabrielle Pepin
The federal Child and Dependent Care Credit (CDCC) subsidizes child care costs for working families. Before 2021, the CDCC was nonrefundable, so only families with positive tax liability after other deductions benefited. I estimate how CDCC eligibility, benefits, and marginal tax rates would change if the credit were made permanently refundable. Under refundability, some 5 percent of single parents
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Fiscal Decentralization and the Composition of Local Government Expenditure: Evidence from South Korea Public Finance Review Pub Date : 2022-04-21 Jinsol Park
The implicit idea underlying theories of fiscal federalism is that fiscal decentralization can change the composition of government expenditure. That is, regardless of whether decentralization enables governments to more readily reflect citizen preferences regarding spending categories or fosters a race to the bottom with reduced taxation and public service levels, change in the composition of government
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Online Open Budget: The Effects of Budget Transparency on Budget Efficiency Public Finance Review Pub Date : 2022-04-21 Hoyong Jung
The government budget should be operated efficiently and democratically to promote economic development and social welfare. This article investigates the claim that budget transparency can improve budget efficiency. Based on the 2017 introduction of the online open budget system in South Korea as an example, the difference-in-difference examination reveals that budget transparency reduces the size
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Revisiting tax effort in emerging markets Public Finance Review Pub Date : 2022-03-03 Gustavo Canavire-Bacarreza, Maria Cecilia Deza, Osmel Manzano, Alejandro Puerta
Insufficient tax revenues has been one of the most pervasive restrictions on investment in the social and economic infrastructure needed to close the development gaps in emerging markets (EM). To assess the potential for increasing tax collection, the literature has emphasized the concept of tax capacity and tax effort. Conceptually, tax effort is modeled as an inefficiency term with both time-varying
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Pro-rich Inflation and Optimal Income Taxation Public Finance Review Pub Date : 2022-03-03 Eren Gürer, Alfons J. Weichenrieder
We study the implications of an increase in the price of necessities, which disproportionally hurts the poor, for optimal income taxation. When the government is utilitarian and disutility from labor supply is linear, the optimal nominal taxes and transfers are unchanged as households supply more labor to secure their consumption expenditures. Quantitative analyses with convex disutility of labor supply
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Does the ACA Medicaid Expansion Affect Hospitals’ Financial Performance? Public Finance Review Pub Date : 2022-02-03 Pengju Zhang, Ling Zhu
This paper examines the effects of states’ Medicaid expansion under the Affordable Care Act (ACA) on hospitals’ financial performance in the United States. Extending previous studies that primarily focus on the immediate short-term impact of the ACA's Medicaid expansion, we investigate if the fiscal effects persist over a longer-term and if the fiscal effects vary across different hospitals. Using
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Public Input Provision, Tax Base Mobility, and External Ownership Public Finance Review Pub Date : 2021-12-01 Mutsumi Matsumoto
This article investigates the distortionary impacts of tax base mobility and external ownership on public input provision. Regional governments compete for mobile tax bases (e.g., business capital). The impact of regional public policy partially accrues to non-residents because immobile factors (e.g., business land) are subject to external ownership. This article derives an optimal rule for regional
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Pandering Politicians? Targeted Economic Development Incentives and Voter Response Public Finance Review Pub Date : 2021-12-01 Jacob Bundrick, Erica Smith, Weici Yuan
Empirical evidence largely suggests that the billions of dollars state and local governments spend on targeted economic development incentive (EDI) programs are typically ineffective at stimulating broad economic activity. The continued use of EDIs by public officials has thus led scholars to investigate the role of these programs in political pandering. In this paper, we explore the relationship between
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The flypaper sticks even when aid travels overseas Public Finance Review Pub Date : 2021-12-01 Emily C. Marshall, James W. Saunoris, T. Daniel Woodbury
This paper extends the current literature by considering the existence of the flypaper effect internationally, with donor countries supplying foreign aid to recipient countries. The flypaper effect refers to the empirical anomaly associated with intergovernmental grants stimulating government expenditures more than can be explained by a pure income effect. The results reveal evidence of flypaper behavior
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Balanced Budget Requirements Revisited Public Finance Review Pub Date : 2021-12-01 Sharon N. Kioko, Michelle L. Lofton
We test the effect of balanced budget requirements (BBRs) on budget outcomes using data published in audited financial statements. With a focus on the General Fund, we find states frequently reported deficits in their adopted budgets and relied on sizeable and favorable expenditure variances to close budget gaps before the end of the budget period. Empirical analysis shows that technical or strict
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A Replication of “Weathering Corruption” ( Journal of Law and Economics, 2008) Public Finance Review Pub Date : 2021-09-16 Adriana Cordis, Jeffrey Milyo
Previous research using data on convictions for corruption-related crimes from the Public Integrity Section (PIN) of the Department of Justice points to a positive correlation between the amount of corruption in a state and the amount of federal funds provided to the state for natural disaster relief. We take a closer look at the relationship between public corruption and disaster assistance and find
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How Does a Reduction in Mandated Medicaid Spending Affect Local Fiscal Behaviors? Evidence from New York State Public Finance Review Pub Date : 2021-09-16 Yusun Kim
In 2005, New York (NY) state capped the growth of county-level Medicaid spending, which abruptly decreased counties’ Medicaid outlay in both relative and absolute terms. This study exploits this discontinuity in county Medicaid outlay to estimate the impact of the relief mandate policy on county budgets and property tax levies. It bridges a gap in the public finance literature by addressing local government
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A Reply to a Replication of “Weathering Corruption” ( Journal of Law and Economics, 2008): Different Data Produce Different Results Public Finance Review Pub Date : 2021-09-16 Peter T. Leeson, Russell S. Sobel
Cordis and Milyo replicate our study, which found a positive relationship between FEMA-provided disaster relief and public corruption in the US states. Our study used the corruption data that virtually every study of American corruption uses: PIN data. Using the same data, Cordis and Milyo find the same result. And using different corruption data from TRAC, they find a different result: no relationship