Fiscal illusion and cyclical government expenditure:state government expenditure in the United States

Abbott, Andrew James and Jones, Philip (2016) Fiscal illusion and cyclical government expenditure:state government expenditure in the United States. Scottish Journal of Political Economy, 63 (2). pp. 177-193. ISSN 0036-9292

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Abstract

A well‐established literature argues that fiscal illusion increases the level of government expenditure. This article focuses on the proposition that fiscal illusion also influences the cyclicality of government expenditure. Predictions are formed with reference to government reliance on high income elasticities of indirect tax revenues and on intergovernmental transfers. Predictions are tested with reference to the expenditures of 36 states in the United States from 1980 to 2000. Government expenditures are more likely to be procyclical when citizens systematically underestimate the cost of taxation.

Item Type:
Journal Article
Journal or Publication Title:
Scottish Journal of Political Economy
Uncontrolled Keywords:
/dk/atira/pure/subjectarea/aacsb/disciplinebasedresearch
Subjects:
Departments:
ID Code:
140448
Deposited By:
Deposited On:
17 Jan 2020 09:35
Refereed?:
Yes
Published?:
Published
Last Modified:
12 Aug 2020 09:59