Stress Testing State Budgets

In this time of record-setting budget deficits for states across the US, analyzing different scenarios for balancing state budgets has become all too commonplace. No longer do states have the luxury – if they ever did – of applying the “same old” standard increases across the board without making fundamental changes. 

In a recent white paper entitled “Stress Testing State Budgets Under Alternative Business Cycle Scenarios,” Professor Ray Nelson of Brigham Young University examines the risks and challenges faced by states given the enormous uncertainty they face regarding future costs and tax revenues.  Using Monte Carlo simulation with risk modeling software @RISK, Prof Nelson facilities various stress tests on different state budget cycles. 

» Read the full white paper

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