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Constitutional Limitations on Borrowing: An Analysis of State Bonded Indebtedness

Kiewiet, D. Roderick and Szakaly, Kristin (1996) Constitutional Limitations on Borrowing: An Analysis of State Bonded Indebtedness. Journal of Law, Economics, and Organization, 12 (1). pp. 62-97. ISSN 8756-6222.

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State and local governments have long had constitutional limits on the issuance of full faith and credit debt. Our analyses find that levels of such debt depend upon the type of restriction in place. States that either prohibit guaranteed debt or require referendum approval to issue it have less guaranteed debt than those that require a supermajority of the legislature to issue debt or those that have revenue-based limitations. Although the issuance of state nonguaranteed debt does not appear to be generally motivated by the aim of circumventing constitutional limitations on guaranteed debt, restrictive provisions at the state level do result in the devolution of debt issuance to governments at the local level. Our findings suggest that current proposals for constitutional limitations on borrowing at the federal level would have much less impact on total government borrowing than their proponents anticipate.

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Additional Information:© 1996 Oxford University Press. An earlier version of this article was presented at the annual meeting of the American Political Science Association, Chicago, Illinois, September 3-5, 1992. We would like to thank Mike Alvarez, Peter Bossaerts, James Clingermeyer, Lance Davis, Bob Erikson, David Grether, Donna Hirsch, Jonathan Katz, James Leigland, John Matsusaka, Mat McCubbins, David Porter, John Peterson, James Poterba, Roberta Romano, Thomas Schwartz, Robert Stein, and B. Dan Wood for their assistance. This work was supported by a grant from the Haynes Foundation, Los Angeles, California.
Group:Social Science Working Papers
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Haynes FoundationUNSPECIFIED
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Official Citation:D. Roderick Kiewiet and Kristin Szakaty Constitutional Limitations on Borrowing: An Analysis of State Bonded Indebtedness JLEO (1996) 12 (1): 62-97
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:64554
Deposited On:02 Mar 2016 00:49
Last Modified:03 Oct 2019 09:39

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