Why is State and Local Government Capital Spending Lower in the New England States than in Other U.S. States?

28 Pages Posted: 7 Sep 2017

See all articles by Riley Sullivan

Riley Sullivan

Federal Reserve Banks - Federal Reserve Bank of Boston

Ronald C. Fisher

Michigan State University - Department of Accounting & Information Systems; Michigan State University - Department of Economics

Date Written: July, 2016

Abstract

This report explores several hypotheses as to why state and local governments in New England have been spending less on capital investment than the national average, on a normalized basis. Census data show that state and local capital spending in all six New England states was well below the national average between 2000 and 2012, whether measured on a per capita basis, as a share of personal income, or as a share of state and local government spending. To explore why this is so, this report considers how capital spending has changed over time, how capital spending differs by state and across spending category, and the quality and quantity of capital stock in New England?s states. The report also considers the relationship between debt issuance and capital spending. The authors find that economic, social, and political characteristics used in previous research are insufficient to fully explain the observed normalized levels of state and local capital spending in the New England states relative to their rates in the national average of all U.S. states. The report does suggest that the relatively large role of state government in New England and government officials? concerns about debt levels may have contributed to lower capital spending.

Suggested Citation

Sullivan, Riley and Fisher, Ronald C., Why is State and Local Government Capital Spending Lower in the New England States than in Other U.S. States? (July, 2016). New England Public Policy Center Policy Reports Paper No. 16-1, Available at SSRN: https://ssrn.com/abstract=3031187

Riley Sullivan (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Boston ( email )

600 Atlantic Avenue
Boston, MA 02210
United States

Ronald C. Fisher

Michigan State University - Department of Accounting & Information Systems ( email )

270 North Business Complex
East Lansing, MI 48824-1034
United States
517-355-2326 (Phone)

Michigan State University - Department of Economics ( email )

East Lansing, MI 48824
United States
517-355-0293 (Phone)

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