Betting on the future with a cloudy crystal ball? How financial theory can improve revenue forecasting and budgets in the states

• 成果类型: Article; Proceedings Paper
• 署名作者: Thompson, Fred; Gates, Bruce L.
• 署名单位: Willamette University
• 刊物名称: PUBLIC ADMINISTRATION REVIEW
• ISSN/ISSBN: 0033-3352
• DOI: 10.1111/j.1540-6210.2007.00771_2.x
• 发表日期: 2007
• 页码: 825-836
• 关键词: fiscal-policy; STABILITY; GROWTH; rules

摘要

Accurately predicting revenue growth is nearly impossible. Predicting the peaks and valleys of the business cycle is even more hopeless. This matters because tax revenues are largely driven by economic growth. Volatile, unpredictable revenue growth causes all sorts of unpleasant responses on the part of governments, most commonly manic-depressive patterns of spending and taxing. Fortunately, modern financial economics gives us a set of tools that can be used to manage volatility. This article shows bow such tools can be used to inform fiscal decision making. The focus here is state governments, but the analysis applies to all jurisdictions that face hard budget constraints and therefore must balance spending increases against revenue growth.