Causes and consequences of fiscal stress in Michigan cities

Do housing bubbles generate fiscal bubbles?

“…Political factors play an important role in the speed of fiscal adjustment: unified control of state government and non-election years increase the magnitude of the adjustment. The analysis in Skidmore and Scorsone (2011) reveals that Michigan cities respond to fiscal stress by cutting spending on recreation and capital improvements as well as road and building maintenance.…”

Assessing the influence of socioeconomic drivers on Italian municipal financial destabilization

“…Later studies seem to downsize the role of socioeconomic factors (Clark, 1999;Dougherty et al, 2000), claiming that they were relevant only when higher levels of government were unable to respond to economic recession (Falconer, 1991). More recent studies seem to provide further evidence about the relevance of socioeconomic downturns in producing local fiscal stress, as socioeconomic factors can substantially influence the revenue-generating capacity of local governments (Honadle, 2003;Edgerton et al, 2004;Beckett-Camarata, 2004;Watson et al, 2005;Carroll, 2005;Jones and Walker, 2007;Skidmore and Scorsone, 2011). Yet, according to some authors and with specific reference to US municipal bankruptcy, political factors appear to shape, influence, or even determine whether or not a government will file for bankruptcy protection, and are therefore more important than economic factors (Park, 2004).…”

A novel multi-attribute benchmarking approach for assessing the financial performance of local governments: Empirical evidence from France

“…Except for the above factors, additional independent variables are considered involving the past performance of the municipalities (one year lag) to control for performance persistence effects, the logarithm of population (POP) and its square (given that size effects are not linear as they are linked to economics and diseconomies of scale, see for example Myazaki, 2014); are used to account for the size of the municipalities (see among others Skidmore & Scorsone, 2011;and Drew & Dollery, 2014), and the GDP per capita (GDPC) (see among others Honadle, 2003) of the departments in which each municipality belongs, so as to control for the effect due to regional economic status. Using departmental level GDPC is rather important as it is directly linked to socioeconomic features as a "weak regional environment [is] expected to contribute to producing a high level of local fiscal stress, possibly resulting in financial destabilization, because it would affect both the LG's revenue generating capacity and the level of local ARTICLE IN PRESS JID: EOR [m5G;July 7, 2015;20:13] expenses" (Capalbo & Grossi, 2014, p. 110).…”