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Published April 1996 | Published
Journal Article

Constitutional Limitations on Borrowing: An Analysis of State Bonded Indebtedness

  • 1. ROR icon California Institute of Technology

Abstract

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.

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.

Additional details

Created:
August 20, 2023
Modified:
December 12, 2023