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The Impact of Industrial Diversification and Clustering on the Volatility of City Budgets

Michael Overton and Robert Bland

May 2017, English

Budget volatility—the difference between expected and actual revenues and expenditures—is a critical component to sustaining a local government’s fiscal health. While scholars have examined many determinants of budget volatility, less understood is the effect of a local government’s economy—the composition of its economic base—on budget volatility. To fill this gap, panel data methods are used to test the impact of a city’s economic base on budget volatility.


Local Government, Municipal Fiscal Health, Public Finance