We examine the negative relationship between the rate of growth in credit and the rate of growth in output per worker. Using a panel of 20 countries over 25 years, we establish that there is a robust correlation: the higher the growth rate of credit, the lower the growth rate of output per...

Can public insurance through redistributive income taxation improve the allocation of risk in an economy in which private risk sharing is limited? The answer depends crucially on the fundamental friction that limits private risk sharing in the first place. If risk sharing is incomplete because...

In the context of several examples of problems associated with present budgetary conventions, I revisit Musgrave's conceptual division of the government's program into Allocation, Distribution and Stabilization Branch subbudgets. I suggest progress towards Musgrave's ideal of a more informative...

Current surpluses in the U.S. have been achieved by a combination of a strong economy, low interest rates, and sharp cuts in defence spending. These surpluses follow a period (the eighties) of rather exceptional budget deficits. This paper investigates the origin, size, and expected future...

In this paper we collect detailed information on the budget institutions of Latin American countries. We classify these institutions on a `hierarchical'/'collegial' scale, as a function of their transparency and the existence of legislative constraints on the deficit. We then show that...

The design of budget rules and institutions, long a neglected area in public finance and macroeconomics, has recently been thrust to center stage by the debate over a balanced budget amendment and other deficit-reduction measures in the United States. This paper describes the existing evidence...

This paper summarizes state balanced budget requirements, and the available empirical evidence on the effect of these rules on state fiscal policies. Existing state rules differ from many current proposals at the federal level. They are typically restricted to part of the state budget, they...

This paper considers the effects of fiscal and financial policy on economic growth in open and closed economies, when human capital formation by young households is constrained by the illiquidity of human wealth. Both endogenous and exogenous growth versions of the basic OLG model are analyzed....

This paper describes the empirical regularities relating fiscal policy variables, the level of development and the rate of growth. We employ historical data, recent cross-section data, and newly constructed public investment series. Our main findings are: (i) there is a strong association...

This paper explores how state fiscal institutions and political circumstances affect the dynamics of state taxes and spending during periods of fiscal stress. The analysis focuses on the late 1980s, when sharp economic downturns in several regions, coupled with increased expenditure demands, led...