UNDERSTANDING STATE SAVINGS: THREE ESSAYS ON STATE RAINY DAY FUNDS

This dissertation provides three distinct perspectives on state rainy day funds. The first empirical chapter explores the factors that influence a state to access their rainy day fund, and a variety of economic, institutional, and political factors to be important. The influence and effects of these factors, however, are contextual, and vary depending on the economic environment and political control. The most important influences on accessing the rainy day fund, however, are economic indicators that are in line with the purpose of state rainy day funds. The second empirical chapter investigates the influence of state rainy day fund deposit and withdrawal rules on where lawmakers place savings. The findings reveal that when states have strict rule configurations that limit legislative discretion, lawmakers avoid placing savings in the formal rainy day funds and opt for informal savings that allow for easier access. The final empirical chapter examines if states save enough to handle their unique economic environments. This chapter replicates Joyce\u27s (2001) study with longitudinal data to gain a better understanding of state savings behavior and economic environments. Additionally, this chapter posits that informal and formal rainy day fund savings are closely linked, and, therefore, scholars need to consider both accounts when determining if states save enough their unique economic environment. Results indicate that under a broader view of state savings behavior and volatility, states are in a much better position than Joyce originally reported. What is more, when we consider both formal and informal savings, states are in a very good position to handle average volatility