Cyclical Economic Impacts on Aggregated Fiscal Imbalance Levels in the United States

• Main Author: Merriman, Douglas Arthur
• Format: Others
• Language: en
• Published: ScholarWorks 2015
• Subjects: Fiscal Imbalance; Economics; Finance and Financial Management; Public Administration
• Online Access: https://scholarworks.waldenu.edu/dissertations/239; https://scholarworks.waldenu.edu/cgi/viewcontent.cgi?article=1238&context=dissertations

Cyclical Economic Impacts on Aggregated Fiscal Imbalance Levels in the United States by Douglas A. Merriman MSM, University of Maryland University College, 2004 BS, Central Washington University, 1983 Dissertation Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy Applied Management and Decision Science Walden University July 2015 The impacts of cyclical economic volatility on state-level fiscal imbalance levels have gained attention, given that beginning in late 2007, the United States experienced the deepest and longest-lasting recession in its history. The problem addressed by this study was whether there was a statistically significant relationship between certain economic factors and fluctuations in state-level fiscal imbalance levels in the U.S. during the period 2000 to 2010. The purpose of this study was to evaluate relationships between certain economic factors and state-level fiscal imbalance levels in the 48 contiguous U.S. states, and to assess how the presence and relational strength of these relationships varied during an economic cycle. Musgrave's theory of public economy, Oates's fiscal federalism theory, and Buchanan's fiscal imbalance theory served as the theoretical foundation. This longitudinal, time-series-cross-sectional study used multiple linear regressions to assess the relationships between the federal agency-provided datasets of unemployment, age, per capita income, poverty, entrepreneurial activity, gross state product, and the levels of fiscal imbalances in the 48 contiguous U.S. states during the period of 2000 to 2010. The study results provided evidence that the set of independent variables explained a significant amount of the overall fluctuation in fiscal imbalance levels from 2000 to 2010, and that the independent variables of unemployment rate, percent of population under the federal poverty level, and gross state product were related to fiscal imbalance levels with varying degrees of statistical significance and strength from one year to the next. The implication of the study for social change is that policy makers who understand these relationships may construct better policies to mitigate fiscal imbalance volatility and to encourage state-level fiscal equivalence across the United States.