Veuger, Clemens, Giesecke, et al., What Do States Do with Fiscal Windfalls? Evidence from the Pandemic (AEI working paper, 2024-02-28)
Summary
This AEI Economic Policy Working Paper Series page, dated February 28, 2024, gives the abstract of What Do States Do with Fiscal Windfalls? Evidence from the Pandemic by Stan Veuger, Jeffrey Clemens, Oliver Giesecke and others. Using variation in pandemic-era federal aid driven by the strength of political representation, the authors find incremental aid was most likely to end up in general administrative service spending and employee pension benefit funding. The abstract states that total state revenues and expenditures had increased by around 70 cents per incremental windfall dollar by 2022, with statistically significant effects of 38 cents to general government expenditures and 7 cents to pension funding. Where public employees have above-median representation on pension fund boards, over 14 cents of each marginal dollar went to pension funding.
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“Veuger, Clemens, Giesecke, et al., What Do States Do with Fiscal Windfalls? Evidence from the Pandemic (AEI working paper, 2024-02-28).”
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Latest Work Working Paper Economics What Do States Do with Fiscal Windfalls? Evidence from the Pandemic by Stan Veuger , Jeffrey Clemens , Oliver Giesecke , et al. February 28, 2024 AEI Economic Policy Working Paper Series Abstract Using variation in federal pandemic-era fiscal aid to states driven by the strength of political representation, we find that incremental pandemic-era fiscal aid to states was most likely to end up in the categories of general administrative service spending and employee pension benefit funding. Spending on categories that motivated the aid in the first place, such as healthcare, education, and infrastructure, may also have responded but does not show robust patterns. Total state government revenues and expenditures had increased by around 70 cents per incremental windfall dollar of committed federal funds by 2022. Of this, the statistically significant categorical spending effects are 38 cents to general government expenditures (the residual that in principle excludes healthcare, education, infrastructure, and other functional categories) and 7 cents to pension funding, even though the latter use was inconsistent with the objectives of the legislation. The pension contribution increases are driven by the states where public employees have above-median representation on state pension fund boards, where over 14 cents of each marginal dollar went to pension funding. Read the full PDF here. Working Paper Economics What Do States Do with Fiscal Windfalls? Evidence from the Pandemic Stan Veuger, Senior Fellow Jeffrey Clemens, Associate Professor, Economics, University of California - San Diego Oliver Giesecke, Research Fellow, Hoover Institution Joshua Rauh, Senior Fellow, Hoover Institution, and Ormond Family Professor of Finance, Stanford Graduate School of Business Related Commentary Liberty Lens Don’t Gut 401ks and IRAs to Save Social Security Recent proposals to eliminate or reduce the tax advantages of 401ks and IRAs are misguided, write Stan Veuger and Joshua Rauh. BY Stan Veuger + Joshua Rauh ON 24 Jan 24 Working Paper AEI Economic Policy Working Paper Series Politics and the Distribution of Federal Funds: Evidence from Federal Legislation in Response to COVID-19 In a new working paper, Jeffrey Clemens and Stan Veuger examine how political representation shapes the distribution of federal funds to state and local governments in the context of COVID-19 relief. BY Stan Veuger + Jeffrey Clemens ON 31 May 21 Working Paper National Bureau of Economic Research Was Pandemic Fiscal Relief Effective Fiscal Stimulus? Evidence from Aid to State and Local Governments Jeffrey Clemens, Philip G. Hoxie, and Stan Veuger analyze the effects of federal aid to state and local governments across all four major pieces of COVID-19 response legislation. Through September 2021, they estimate that the... BY Stan Veuger + Jeffrey Clemens + Philip G. Hoxie ON 21 Jun 22 Working Paper AEI Economic Policy Working Paper Series Spatial Spillovers and the Effects of Fiscal Stimulus: Evidence from Pandemic-Era Federal Aid for State and Local Governments This paper analyzes the extent to which US federal aid to state and local governments during the COVID-19 pandemic had effects that spilled over across state lines. The paper finds that federal assistance had a... BY Stan Veuger + Beatrice Lee + Jeffrey Clemens + et al. ON 17 Jul 22
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