State highway capital expenditure and the economic cycle
By: HO, Alfred tat-Kei
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ArticlePublisher: Philadelphia : Routledge, January 2008International Journal of Public Administration - IJPA 31, 2, p. 101-116Abstract: The conventional wisdom on state and local budgeting suggests that policy makers are quick to cut capital spending during fiscal stress and that budgetary politics may create a bias against long-term capital investment. This study analyzes changes in highway capital spending of U.S. state governments between 1988 and 2000, and shows a contrary result. During economic recessions, states on average slow their capital spending growth, but do not impose significant cuts, and, during economic booms, they are quick to capitalize on the opportunity and raise capital spending significantly. The article draws from the results of the study to discuss implications for the current fiscal crisis and for future research on capital budgeting
The conventional wisdom on state and local budgeting suggests that policy makers are quick to cut capital spending during fiscal stress and that budgetary politics may create a bias against long-term capital investment. This study analyzes changes in highway capital spending of U.S. state governments between 1988 and 2000, and shows a contrary result. During economic recessions, states on average slow their capital spending growth, but do not impose significant cuts, and, during economic booms, they are quick to capitalize on the opportunity and raise capital spending significantly. The article draws from the results of the study to discuss implications for the current fiscal crisis and for future research on capital budgeting
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