As smaller state budgets become popular among voters, a better understanding of the factors affecting budget balances becomes imperative. This paper tries to shed some light on the issue by analyzing New York State budget data. The results of a Granger-Causality test in conjunction with variance decomposition techniques show that tax revenues, as opposed to expenditures, are the leading factor in creating bigger budgets in New York.
Rebecca Glover, Xueming Luo and Mojtaba Seyedian. "The Causal Relationship Between Tax Revenues and Expenditures: Evidence from New York State." New York Economic Review. vol. 33, Fall 2002, p. 61-66
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