Institutions and fiscal sustainability.

I. INTRODUCTION Even as U.S. state and local governments struggle to dig themselves out from the Great Recession, it is clear that their fiscal challenges will not miraculously disappear after [...]
As budgetary commitments outpace current revenues and long-term liabilities balloon, the fiscal sustainability of state and local governments is a matter of mounting concern. Over the years, these governments have experimented with a wide variety of political and fiscal institutions, ranging from direct democracy to balanced budget rules, with the goal of slowing the growth of government and increasing financial responsibility. This article synthesizes the related empirical literature, summarizing what we know (and don't know) about the effectiveness of various rules and procedures in promoting fiscal sustainability. Keywords: state and local public finance, institutions, public expenditure, taxation, deficits, debt JEL Codes: H10, H20, H70