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Requiring states to run balanced budgets

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Some states are required to balance their budgets. Is this measure stabilizing or destabilizing? Suppose all states were committed to a balanced budget philosophy and the economy moved into a recession. What effects would this philosophy have on the size of the federal deficit?

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Requiring states to run balanced budgets is briefly debated in terms of advantages and disadvantages.

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Requiring states to run balanced budgets is destabilizing because this renders the states unable to respond to economic fluctuations (business cycles). If all ...

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