Association for Public Policy Analysis & Management

One of the difficulties in the public finance literature is the measurement of fiscal health. Researchers have typically relied on the analysis of a government’s ratios to indicate financial standing, but too heavy of a reliance on ratios can produce misleading results. This research proposes to move beyond simple ratio analysis and reconsider how we measure the fiscal condition of a government. Using the 112 municipalities in the Fiscally Standardized Cities (FiSC) database, I explore the effectiveness of the available measurement systems within the literature in the context of predicting municipal bankruptcy.