In response to the recent fiscal crisis, state governments in the United States have deeply cut aid, often by the same percentage across communities. This across-the-board approach ignores local fiscal disparities and places a larger burden on communities in worse underlying fiscal health. This...

This paper develops a new measure of state and local fiscal sustainability called the "trend gap," which is based on socioeconomic and other fundamental factors and removes the short-term influence of the business cycle. The paper estimates the trend gap and finds that the nationwide per capita...

Local governments depend on state aid to provide residents and businesses with vital public services, such as education, police and fire protection, and safe public roads. However, in response to the recent fiscal crisis, many states are quickly and deeply cutting local aid. The Congressional...

This policy brief evaluates the distribution of municipal aid in Massachusetts in FY 2011 and suggests an approach for reforming municipal aid without redistributing current aid. We use the “municipal gap,” a measure that is outside the control of local officials, to determine a...

We investigate the effects of political institutions on economic growth. We specifically explore this relationship while controlling for heterogeneity and model uncertainty. We use threshold regression (Hansen (2000)) to search for possible nonlinearities and/or interaction effects with respect...

In the first calendar year following the Great Recession, signs of an economic recovery began to take shape across New England. An improving labor market picture, growth in income, indications of a stabilizing housing market, and booming exports spurred economic growth in the region in 2010. As...

We investigate the effects of political institutions on economic growth. We specifically explore this relationship while controlling for heterogeneity and model uncertainty. We use threshold regression (Hansen 2000) to search for possible nonlinearities and/or interaction effects with respect to...

This paper designs a new equalization-aid formula based on fiscal gaps of local communities. Using conceptual analysis and simulations with Massachusetts data, the authors illustrate the tradeoffs that policymakers face in deciding on the policy variables in the formula and lay out several...

Local jurisdictions differ in the per capita costs that they must incur to provide a standard quality and quantity of municipal services at average efficiency. These cost differences are attributable to local social and economic characteristics or circumstances that are outside the control of...