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In the past two decades, much of the literature in the area of government financial management has been devoted to studying the causes of fiscal stress. Most studies emphasized the role of such factors as economic cycles, business relocation and factors beyond the control of policy makers as major causes of fiscal stress. This study extends the scope of the research in this area to investigate whether state and local fiscal structures contribute to fiscal stress. Using a pooled cross-sectional time-series approach with the state-local data ranging from 1982 to 1997, the result shows that: there is more significant difference in the composition of tax structures than that of total revenue; high aggregate spending is associated with high fiscal stress; state and local governments over-commit on the social welfare category; local revenue diversification is associated with low fiscal stress; and fiscal decentralization or high spending responsibility assumed by local governments is associated with low fiscal stress. The findings suggest that local revenue diversification and fiscal decentralization can be used as measures to reduce fiscal stress.

Despite balanced budget requirements, each year most states carry short term debt (STD) across fiscal years. Logit analysis results suggest structural fiscal stress causes states to carry STD across fiscal years. This strategy may not be rational, because STD is a tool for smoothing short-term shortfalls, and not for correcting structural fiscal stress. Cross sectional time series analysis results suggest both structural and cyclical factors influence the amount of year end STD. Findings suggest STD amounts fluctuate as a rational temporary replacement for long-term debt, growing when long term rates rise and decreasing when they fall.

This study aims to analyze the imbalances in the public finance structure of Pakistan’s economy and highlight the need for comprehensive reforms. Specifically, it aims to contribute to the empirical literature by analyzing the relationship between fiscal vulnerability, financial stress and macroeconomic policies in Pakistan’s economy between 1971 and 2020.

The study develops an index of fiscal vulnerability, an index of financial stress and an index of macroeconomic policies. The fiscal vulnerability index is based on the patterns of fiscal indicators resulting from past trends of the selected variables in Pakistan’s economy. The financial stress in Pakistan is caused from the financial disorders that are acknowledged in the composite index, which is based on variables with the potential to indicate periods of stress stemming from the foreign exchange market, the securities market and the monetary policy components. The macroeconomic policies index is developed to analyze the mechanism through which fiscal vulnerability and financial stress have influenced macroeconomic policies in Pakistan. The causal association between fiscal vulnerability, financial stress and macroeconomic policies is analyzed using the auto-regressive distributive lags approach.

There exists a long-run relationship between the three indices, and a bi-directional causality between fiscal vulnerability and macroeconomic policies.

This study contributes to the development of a fiscal monitoring mechanism, which has the basic purpose of analyzing the refinancing risk of public liabilities. Moreover, it focuses on fiscal vulnerability from a macroeconomic perspective. The study tries to develop a framework to assess fiscal vulnerability in light of “The Risk Octagon” theory, which focuses on three risk components: fiscal variables, macroeconomic-disruption-associated shocks and non-fiscal country-specific variables. The initial contribution of this work to the literature is to develop a framework (a fiscal vulnerability index, financial stress index and macroeconomic policies index) for effective and result-oriented macro-fiscal surveillance. Moreover, empirical literature emphasized and advised developing countries to develop their own capacity mechanisms to assess their fiscal vulnerability in light of the IMF guidelines regarding vulnerability assessments. This study thus attempts to fulfill the said gap identified in literature.

This paper analyzes the impact of economic downturns on the revenue and expense sides of city financing for the period 2003 to 2009 using a convenience sample of the audited end of year financial reports for thirty midsized US cities. The analysis focuses on whether and how quickly and how extensively revenue and spending directions from past years are altered by recessions. A seven year series of Comprehensive Annual Financial Report (CAFR) data serves to explore whether citiesʼ revenues and spending, especially the traditional property tax and core functions such as public safety and infrastructure withstood the brief 2001 and the persistent 2007 recessions? The findings point to consumption (spending) over stability (revenue minus expense) for the recession of 2007, particularly in 2008 and 2009.

This paper aims to develop a compound measure, which is fiscal vulnerability index, provides early warning signals of fiscal sustainability problems for Türkiye's economy.

The index is constructed using twelve distinct fiscal indicators and applying the portfolio method, which considers the time-varying cross-correlation structure between the subindices.

Dynamics of the fiscal vulnerability index indicate that it accurately predicts to the well-known fiscal crisis occurring in Türkiye's recent history. As a result, such a compound measure should be used in the early identification of fiscal vulnerability in Türkiye.

The main contribution of this paper, relative to existing papers, is that a fiscal vulnerability index was constructed by employing the most contemporaneous method and evaluating its performance in terms of capturing historical stress periods.

To date, only two counties in the United States have filed for bankruptcy protection: Orange County, California (1994) and Greene County, Alabama (1996). This case study pertains only to Greene County. Although economic decline due to a loss of gaming revenues was involved, financial mismanagement was the primary causal factor for Greene County’s fiscal stress. This research chronicles an impoverished rural Alabama county whose legislative and administrative decisions resulted in its fiscal stress and municipal bankruptcy. The Greene County bankruptcy case was closed in 1999 and the County continues to operate under a fiscal recovery plan. However, the County has yet to comply with the miscellaneous provisions of the bankruptcy plan that could improve the financial management of the County.

This paper aims to determine whether local governments (LGs) use non-consolidated municipally owned companies (MOCs), excluded from public sector entities and, consequently, from sub-national debt to avoid fiscal debt limits. This paper contributes to the literature by analysing the fiscal debt rule’s impact on the off-budget municipal activities in total and separate in different types of local government units.

This paper uses difference-in-differences and the system general method of moments model with the Blundell–Bond estimator for dynamic panel data analysis of MOCs owned by 866 Polish municipalities in 2010–2018.

This paper shows that the MOCs’ revenues support limited local public debt capacity by indebtedness restrictions imposed on municipalities in 2014. As a result, less indebted municipalities have higher off-budget revenues. The tightening of fiscal rules related to sub-sovereign indebtedness increased off-budget activities, but that effect is much stronger in rural and rural–urban municipalities than in urban municipalities and big cities.

This paper contributes to the literature by exploring the fiscal debt rule’s impact on the off-budget municipal activities in total and separate in different types of local government units. In this paper, the authors combine theories relating to private and public finance; this is a novel approach and one that is also necessary – as, in fact, the worlds of public and private actors intersect – as exemplified by the existence of MOC.

This paper presents a model of government saving in order to examine several questions regarding the personal and professional saving preferences or inclinations of a national sample of local government finance managers. First, is personal propensity to save related to a preference for local government saving? Second, is personal propensity to spend related to the finance managers' opinions about their local government's spending? Third, what are the determinants of finance managers' propensity to save or spend, both personally and for their local government? Results confirm that finance managers have a personal propensity to save and a positive view toward local government saving. The opposite, propensity to spend, is also influenced by personal preference. Determinants of these behaviors are explored.

Sometimes regarded as the best method of prioritizing budgetary expenditures, Zero-Based Budgeting (ZBB) was introduced into China in the early 1990s and systematically adopted since the recent budgeting reform although it has experienced numerous failures in many countries. This study examines ZBB as practiced in Hubei province in China. In Hubei, although the reformers are intended to create ZBB as a general budgeting framework, eventually, it was a Chinese style Target-Based Budgeting (TBB) rather than ZBB that has been put into place. Interestingly, ZBB has not disappeared but is deliberately applied to budgetary decisions of one type of expenditures under the Chinese style TBB. However, even in the field where ZBB is practiced, its achievements are at best moderate. The Chinese experiment of ZBB presents something new not only for the theory of ZBB but also for the budgeting literature.

This paper aims to analyze the dynamics of the Spanish public debt–gross domestic product ratio during the period 1850–2020.

This study uses a recent procedure to test for recurrent explosive behavior (Phillips et al., 2011; Phillips et al., 2015a, 2015b) to identify episodes of explosive public debt dynamics and also the episodes of fiscal adjustments over this long period.

The identified episodes of explosive behavior of public debt coincided with fiscal stress events, whereas fiscal adjustments and changes in economic policies stabilized public finances after periods of explosive dynamics of public debt.

The longer than usual span of the data should allow the authors to obtain some more robust results than in most of previous analyses of long-run sustainability.