State Expenditures in Utah: An Analysis of Time-Series Models

TL;DRAbstract

The purpose of this paper was to determine the economic, sociopolitical, and other related factors which account for the variation in state expenditures across time. Utah was selected as the test state and data were collected from school records, political rosters, employment statistics, and a variety of federal government documents. Particular emphasis was placed on three areas: the cause-effect relationships between variables, relating the model to a body of economic theory, and demonstrating how the model may be applied in forecasting state expenditure needs. Supply-and-demand analysis was the underlying economic theory. A simultaneous-equation model consisting of four equations--demand for state expenditures, supply of state expenditures, federal grants to states, and an equilibrium condition--was constructed and tested . The paper also discusses the problems of serial correlation and mulli-collinearity.

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