01316pab a2200145 454500008004000000100001700040245010600057260000900163300001500172362000800187520089200195650001801087650002001105773004501125180718b2014   xxu||||| |||| 00| 0 eng d  aKwak, Sunjoo  aThe dynamics of state fiscal behavior over the business cycle: Are state fiscal policies procyclical?  c2014  ap.550-574.  aSep  aThe purpose of this study is to examine how cyclical fluctuations in tax revenue affect state fiscal policies, using a state panel data set. In particular, the study develops a measure of revenue gap-the cyclical component of tax revenue-by calculating the orthogonal deviations of tax bases from the trend, and then analyzes its effects on the level of spending and taxation-as measured by expenditure gap and overall tax rate-using a dynamic panel-data model. The analyses reveal that revenue gap is positively related to expenditure gap and negatively to overall tax rate. These results clearly show the procyclical patterns of state fiscal policies and further suggest the association between revenue volatility and fiscal instability. Based on the results, the study discusses the spending stabilization rules as a policy solution to the recurring state fiscal crises. - Reproduced.  aFiscal policy  aBusiness cycles  aAmerican Review of Public Administration