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The Great Recession and the Use of Fund Balances in North Carolina Counties

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Local Government Budget Stabilization

Part of the book series: Studies in Public Budgeting ((SIPB,volume 2))

Abstract

This chapter examines the determinants of local fund balances and the effects of the fund balances on stabilizing local spending and maintaining the continued provision of public services across business cycles. The empirical results show that fund balances appear to have played a countercyclical role in North Carolina counties during the Great Recession, but not during previous recessions. Over the years, these local governments may have improved their fiscal capacity in using fund balances for dealing with economic downturns.

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Notes

  1. 1.

    There has been a change in fund balance classifications after the issuance of GASB 54 in 2009. This study uses the fund balance classifications prior to the change because local governments have not adopted the format required by GASB 54 in our sample period. Please see the following link for more details on GASB 54: http://www.gasb.org/st/summary/gstsm54.html

  2. 2.

    I experimented with using 2003 or 2004 as the beginning year of the second time period. It did not significantly change the empirical results of the analysis.

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Authors and Affiliations

  1. Indiana University School of Public and Environmental Affairs, IUPUI, 801 W. Michigan Street, BS 4062, Indianapolis, IN, 46202, USA

    Wen Wang

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  1. Wen Wang
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Correspondence to Wen Wang .

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Editors and Affiliations

  1. Center for Policy Research, Syracuse University; Maxwell School, Syracuse, New York, USA

    Yilin Hou

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Wang, W. (2015). The Great Recession and the Use of Fund Balances in North Carolina Counties. In: Hou, Y. (eds) Local Government Budget Stabilization. Studies in Public Budgeting, vol 2. Springer, Cham. https://doi.org/10.1007/978-3-319-15186-1_2

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