Fed paper examines balanced budget rules

federal reserve

A working paper, published by the Federal Reserve in June, assesses the effect of balanced budget rules on budget outcomes at the state and federal levels and finds that states are much more constrained than the federal government.

Authors Byron Lutz and Glenn Follette use US debt and deficit data from the past 50 years to study the effect of rules on budget discipline. The paper finds that rules imposed on the states have a "significant influence" on budget outcomes, but there is "little

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