Budget Volatility and Economic Base Composition in Local Governments

Budget volatility-the difference between expected and actual revenues and expenditures-is a critical component to sustaining a local government's fiscal health. Although scholars have examined many determinants of budget volatility, less understood is the effect of a local government's eco...

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Bibliographic Details
Published in:Municipal finance journal 2022-04, Vol.43 (1), p.1
Main Authors: Overton, Michael R, Bland, Robert L
Format: Article
Language:English
Subjects:
Budgets
Diversification
Economic development
Federal budget
Municipal finance
Volatility
Online Access:Get full text
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Summary:Budget volatility-the difference between expected and actual revenues and expenditures-is a critical component to sustaining a local government's fiscal health. Although scholars have examined many determinants of budget volatility, less understood is the effect of a local government's economy-the composition of its economic base-on budget volatility. To fill this gap, this article uses panel data methods to test the impact of a city's economic base on budget volatility. The results suggest that industrial diversification has no impact on budget stability but that certain industrial clusters do generally promote budget stability.
ISSN:0199-6134
1933-9321