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Grant Levels and Debt Issuance: Is There a Relationship? Is There Symmetry?
Author(s) -
Martell Christine R.,
Smith Bridget M.
Publication year - 2004
Publication title -
public budgeting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.694
H-Index - 30
eISSN - 1540-5850
pISSN - 0275-1100
DOI - 10.1111/j.0275-1100.2004.02403004.x
Subject(s) - debt , affect (linguistics) , work (physics) , state (computer science) , monetary economics , economics , internal debt , financial system , business , finance , psychology , mechanical engineering , communication , algorithm , computer science , engineering
Although previous work on fiscal federalism and grants has focused on the effects of grants on expenditures, no published research examines the impact of decreasing grants on state financing. This research addresses how decreasing levels of federal grant money to states affect states' long‐term debt issuance, and whether the relationship is symmetric for increasing and decreasing grants. The model is tested with time series, cross‐sectional data from 1984 to 1999. The results show that grants affect debt issuance, the effect is asymmetric, and direction of the effect differs for different types of debt issuance.