Alex Williams

Date of Award

Spring 2020




Jan Kregel, Ph.D.


We present a novel framework for understanding the relationship between the federal and state governments of the United States of America. Drawing on the experience of state government finances during and after the Great Recession in 2008, we propose the establishment of novel intragovernmental budgetary stabilization mechanisms. We draw out the flawed arguments of the existing fiscal federalism literature and demonstrate how the work of Michael Pettis and Modern Monetary Theory provide more usable insights when crafting public policy. We propose several potential policy responses and produce a counterfactual model of state finances after the Great Recession using the new policy response. These results are analyzed to show their effectiveness. Finally, it is demonstrated that this policy could be implemented by either the Treasury Department as past programs have been, or by the Federal Reserve. Keywords

Access Control

Open Access