Journal of Economic Perspectives: Vol. 18 No. 2 (Spring 2004)


Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter


JEP - All Issues

State Budget Deficit Dynamics and the California Debacle

Article Citation

Sheffrin, StevenM. 2004. "State Budget Deficit Dynamics and the California Debacle." Journal of Economic Perspectives, 18(2): 205-226.

DOI: 10.1257/0895330041371330


This paper analyzes the recent experience with state budget deficits in the United States, with an in-depth analysis of the California experience. Compared to prior recessions, states were slower to make adjustments in taxes and spending this time. The paper explores a variety of reasons for this difference including changes in the legal, political, and institutional environments, the unusual increase in capital gains revenue during the boom preceding the recession, and the inherent difficulties in forecasting revenues, particularly those derived from capital income. As the case study from California illustrates, states made long term commitments from temporary revenue sources and were required to make budgetary decisions in the face of very incomplete information about current and projected tax receipts.

Article Full-Text Access

Full-text Article (Complimentary)


Sheffrin, Steven M.


View Comments on This Article (0) | Login to post a comment

Journal of Economic Perspectives

Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)


JEP - All Issues

Virtual Field Journals

AEA Member Login:

AEAweb | AEA Journals | Contact Us