The 2021 winner of ABFM’s Michael Curro Award for best Graduate Student Paper is John Stavick (Indiana University, Paul H. O’Neill School of Public & Environmental Affairs).
The award is for his paper “Do Budget Maneuvers Contribute to the Long Term Fiscal Imbalance of State Budgets?”, which he will present Friday, Session 9, 3:15-4:30PM in New Challenges and Strategies for Policy Institutions Supporting Intergovernmental Fiscal Relations in Thomas.
I nominated John’s paper, and this is the summary I wrote of its contributions in the nomination letter:
Stavick’s paper is an extremely creative and impressive way of providing evidence to the important question of whether state budgetary “gimmicks” have long-term budgetary consequences. As Stavick deftly reviews in the literature, what generally happens in the literature is that a recession occurs, a bunch of papers (often in a special issue) discuss the various ways in which states responded on the theme of cutback management which condemn the use of the various gimmicks states employ, finishing with a call for long-term follow up to see what the implications are. Then the economy recovers and scholars lose interest and don’t follow up. Well, Stavick is following up by looking at the decade following the largest recession since the Great Depression. To the extent that longer term examinations exist in the literature, they mostly take a look at a state, then trace through its history and find some gimmicks that were employed. However, this does not tell us how often these gimmicks are employed and how often the use of a particular gimmick actually results in the kind of interesting problems that generate case study attention from scholars.
Stavick’s point is that scholars are implying that budget gimmicks employed during a major fiscal stressor (like the Great Recession) are problematic in the long-run because they will be tempting for the state to repeat, or are in some other way short-sighted that will have long term effects on their institutional capacity. Stavick uses recent literature for cataloguing these gimmicks and then creates a unique and novel dataset of their use during the Great Recession. The description of what he found is itself interesting. Some gimmicks are widespread and Stavick provides illustrative cases where they likely have long-term implications, and this descriptive analysis is a good contribution in its own right. But he then draws from the literature on community resiliency to develop a categorization scheme for different types of fiscal shocks, binning them into four different types post-fiscal shock trajectories. Stavick plotted nearly a thousand different spending categories across all states from 2007 to 2018, blinded the figures, and then asked a team of graduate students to identify which resiliency diagram best represented the actual time series data. It turns out the main expenditure category he actually uses (real direct general expenditures) has a high degree of cross-validation among the team categorizing the graphs (over 95%). He then proceeds to use a multinomial logit regression to see if the budget choices made during the Great Recession indeed manage to predict the type of post-shock period that scholars typically warn us of. He does find that states most likely to engage in “human resource related cuts” (mostly furloughs and layoffs) are less likely to find themselves with a “consistent growth” post-period and increases the probability of experiencing a gradual “gradual decline.” States that impose “across the board cuts” and “using the rainy day funds” are less likely to experience a “gradual decline” over the subsequent decade. However, the strategies scholars have identified as “gimmicks” produce no effect on post period recovery whatsoever.
Attend his presentation, and if you meet him please be sure to share your congratulations with him.