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Free Content Health politics? Determinants of US states’ reactions to COVID-19

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Were policy responses of the US states to the pandemic driven by partisan politics or by budgetary reasons? We show that balanced-budget rules also had an impact, mediated by the possibility of benefiting from the funds previously stored in budget stabilisation funds. State policymakers tried to square the circle by simultaneously respecting budget rules, limiting the economic impact of the social distancing measures, combating the pandemic and pandering to their political bases. Some fiscal rules have induced a trade-off between health and public finance, which may reignite the debate on the pro-cyclicality of fiscal rules.
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Keywords: COVID-19; balanced-budget rules; budget stabilisation funds; social distancing

Affiliations: 1: University of Lille, France and CIRANO, Canada 2: University of Lille, France 3: University of Lille, France, Polytechnique Montréal and CIRANO, Canada

Appeared or available online: November 24, 2020

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