¹ See, e.g., Hou, Yilin & Smith, Daniel L., Do State Balanced Budget Requirements Matter? Testing Two Explanatory Frameworks, 145 Pub. Choice 57, 57 (2010). They show that while balanced budget requirements (BBRs) can influence public expenditure, the precise impact depends upon the nature of each BBR.Google Scholar

² For example, France and Germany have pushed for balanced budget requirements in the E.U. See Latham, Mark & Somaskanda, Sumi, France, Germany Push for Balanced Budgets, USA Today, Dec. 9, 2011, available at http://www.usatoday.com/news/world/story/2011-12-08/sarkozy-merkel-debt-europe/51730480/1 (last visited Apr. 29, 2012).Google Scholar

³ For further information, see Standard & Poors, United States of America Long-Term Rating Lowered To “AA+” Due To Political Risks, Rising Debt Burden; Outlook Negative, Aug. 05, 2011, available at http://www.standardandpoors.com/ratings/articles/en/us/?assetID=1245316529563 (last visited Apr. 29, 2012).Google Scholar

⁴ On the impact of the crisis in Australia and Australia's plans to achieve a budget surplus, see Press-Release, 2012-13 Pre-Budget Submissions, The Hon Wayne Swan MP: Deputy Prime Minister and Treasurer (Dec. 19, 2011), http://ministers.treasury.gov.au/DisplayDocs.aspx?doc=pressreleases/2011/157.htm&pageID=003&min=wms&Year=&DocType (last visited May 14, 2012).Google Scholar

⁵ See Greece's Budget Deficit Shrinks More Than Expected, USA Today (Mar. 21, 2012), http://www.usatoday.com/money/world/story/2012-03-21/greece-deficit-targets/53684370/1 (last visited Apr. 29, 2012); Stelios Bouras, Greece Budget Deficit Widens 15%, Wall St. J. (Oct. 12, 2011), http://online.wsj.com/article/SB10001424052970204002304576626430653206132.html (last visited April 29, 2012); Rachel Donadio, Greek Statistician Under Scrutiny for Budget Estimates Before Euro Crisis, N.Y. Times (Apr. 06, 2012), http://www.nytimes.com/2012/04/07/world/europe/greek-official-under-scrutiny-for-pre-crash-budget-figures.html?pagewanted=all (last visited Apr. 29, 2012); Greece Budget Deficit Worse Than Thought, BBC World News (Apr. 26, 2011), http://www.bbc.co.uk/news/business-13194344 (last visited Apr. 29, 2012).Google Scholar

⁶ See Goodman, David, Spanish Bonds to Fall as MEAG Sees 10-Year Yields Near 7%, Bloomberg Businessweek (Apr. 18, 2012), http://www.businessweek.com/news/2012-04-18/spanish-bonds-to-fall-as-meag-sees-10-year-yields-near-7-percent (last visited Apr. 29, 2012); Juan Montes, Update: Spain's Rajoy Says Country Can Avoid Bailout, Wall St. J. (Apr. 17, 2012), http://online.wsj.com/article/BT-CO-20120417-713554.html (last visited Apr. 29, 2012).Google Scholar

⁷ See Zampano, Giada, Italy Narrows Budget Deficit, Wall St. J. (Apr. 4, 2012), http://online.wsj.com/article/SB10001424052702303299604577323020883719812.html (last visited Apr. 29, 2012); Rachel Donadio & Gaia Pianigiani, Ital y Pushes Back Balanced Budget by 2 Years, N.Y. Times (Apr. 18, 2012), http://www.nytimes.com/2012/04/19/business/global/19iht-italybudget19.html (last visited Apr. 29, 2012).Google Scholar

⁸ For a full summary of the tax and expenditure limits, see the tables in the Appendix.Google Scholar

⁹ See Poterba, James M., Balanced Budget Rules and Fiscal Policy: Evidence from the States, 48 Nat'l Tax J. 329, 330 (1995). For theoretical modeling of BBRs see generally Stephanie Schmitt-Grohe & Martin Uribe, Balanced-Budget Rules, Distortionary Taxes, and Aggregate Instability, 105 J. of Pol. Econ. 976 (1997).Google Scholar

¹⁰ Exceptions can include natural disasters. Article V of North Carolina's Constitution contains some exceptions that could arguably allow it to respond to natural disasters. See Shaw, Robert Ward, The States, Balanced Budgets, and Fundamental Shifts in Federalism, 82 N.C. L. Rev. 1195, 1200 (2004). Alternatively, they can include super-majority provisions that would allow the government to borrow. For example, Article 8, § 8 of Montana's Constitution states that “[n]o state debt shall be created unless authorized by a two-thirds vote of the members of each house of the legislature or a majority of the electors voting thereon.” Mont. Const. art. 8, § 8.Google Scholar

¹¹ There are some exceptions to the trend of value-creation. However, the main party responsible for violating prudent spending limits saw its support base fall from 55% of the electorate to 23% of the electorate. See Salusinszky, Imre, Kristina Keneally Leading the Most Unpopular Labor Government in History, Australian (Oct. 29, 2010), http://www.theaustralian.com.au/news/kristina-keneally-leading-the-most-unpopular-labor-government-in-australia/story-e6frg6o6-1225944944807 (last visited Apr. 29, 2012).Google Scholar

¹² On the lack of BBR at the federal level see Corsetti, Giancarlo & Roubini, Nouriel, European Versus American Perspectives on Balanced-Budget Rules, 86 Am. Econ. Rev. 408, 412 (1996); Jonathan Rodden & Erik Wibbels, Fiscal Decentralization and the Business Cycle: An Empirical Study of Seven Federations, 22 Econ. & Pol. 37, 42 (2010); Lisa Desjardins, Why the U.S. May Never Have a Balanced Budget Again, CNN.com (Mar. 29, 2012), http://edition.cnn.com/2012/03/29/politics/balanced-budget/index.html (last visited Apr. 29, 2012).Google Scholar

¹³ For a full discussion, see infra Part B.Google Scholar

¹⁴ See Mark L. Humphery-Jenner, The Impact of the EU Takeover Directive on Takeover Performance and Empire Building, 18 J. of Corp. Fin. 254 (2012); Anne Meuwese et al., Towards a European Administrative Procedure Act, 2 Rev. Eur. Admin. L. 3, 4 (2009); Wim Voermans & Ymre Schuurmans, Better Regulation by Appeal, 17 Eur. Pub. L. 507 (2011); Rey Koslowski, A Constructivist Approach to Understanding the European Union as a Federal Polity, 6 J. Eur. Pub. Pol'y 561 (1999); Eddy Wymeersh, Europe's New Financial Regulatory Bodies, 11 J. Corp. L. Stud. 443, 444 (2011); Eilis Ferran, Crisis-Driven EU Financial Regulatory Reform, in The Regulatory Aftermath of the Global Financial Crisis 1, 3 (Eilis Ferran et al. eds., 2012).Google Scholar

¹⁵ See Hagen, Jurgen von & Eichengreen, Barry, Federalism, Fiscal Restraints, and European Monetary Union, 86 Am. Econ. Rev. 134, 134 (1996); Barry Eichengreen & Tamim Bayoumi, The Political Economy of Fiscal Restrictions: Implications for Europe from the United States, 38 Eur. Econ. Rev. 783 (1994).Google Scholar

¹⁶ This comes from the Stability and Growth Pact. See Resolution of the European Council on the Stability and Growth Pact, 1997 O.J. (C236) [hereinafter Stability and Growth Pact]. For a discussion see Feldstein, Martin, The Euro and the Stability Pact, 27 J. Pol'y Modeling 421, 25 (2005). The EU also provides a discussion on its website. See Council Regulation 1467/97, The Corrective Arm: The Excessive Deficit Procedure, 1997 O.J. (L 209) 6, 8 (EC).Google Scholar

¹⁷ See Tiryaki, S. Tolga, Has the Stability and Growth Pact Changed the Likelihood of Excessive Deficits in the European Union?, Cent. Bank Repub. Turkey rev. 65, 66 (2008); Ludger Schuknecht et al., The Stability and Growth Pact: Crisis and Reform5 (European Central Bank, Occasional Paper Series No. 129, Sept. 2011). For a useful summary see Financial Glossary: Stability and Growth Pact, Reuters, Sep. 21, 2011, available at http://glossary.reuters.com/index.php/Stability_and_Growth_Pact (last visited Apr. 29, 2012); Feldstein, supra note 16.Google Scholar

¹⁸ This is a mathematical implication: If the country can have a deficit of 60% of GDP, then the country with the larger GDP can accrue a larger deficit.Google Scholar

¹⁹ Examples of this include the Maastricht Treaty, Feb. 7, 1992, 31 I.L.M. 247, and the Stability and Growth Pact, supra note 16.Google Scholar

²⁰ The voting for the E.U. parliament is relatively less direct than the voting for the national parliament. Under the Lisbon treaty, there will be 751 members spread across the twenty-seven member-states. Each state has at least six members of the European parliament (MEPs) and at most ninety-six MEPs. Where the state has six MEPs, the citizens of that state will typically vote for fewer MEPs than they will national parliamentarians. For example, Luxembourg is entitled to six MEPs, but has a parliament that comprises sixty members in the Chamber of Deputies. See Elections in Europe: A Data Handbook 2051 (Dieter Nohlen & Phillip Stover eds., 2010).Google Scholar

²¹ Hou, Yilin & Smith, Daniel L., Informal Norms as a Bridge Between Formal Rules and Outcomes of Government Financial Operations: Evidence from State Balanced Budget Requirements, 20 J. Pub. Admin. Res. & Theory 655, 656 (2010). The lack of direct democratic accountability is one of the criticisms of the WTO and is an argument for why it lacks broad-based normative (legal) support. See Pasztor, Tamas, Redressing the Legitimacy Deficit Within the World Trade Organization: The Aspect of External Transparency, 38 Legal Issues Econ. Integration 163 (2011). Further, Lavrijssen and Hancher suggest that the lack of transparency of some supranational E.U. administrators may induce an accountability and legitimacy gap. See Hancher, Leigh & Lavrijssen, Saskia, Networks on Track: From European Regulatory Networks to European Regulatory Network Agencies, 26 Legal Issues Econ. Integration 23 (2009).Google Scholar

²² This follows the analysis in Asen Lefterov, How Feasible Is the Proposal for Establishing a New European System of Financial Supervisors?, 38 Legal Issues Econ. Integration 33 (2011).Google Scholar

²³ In addition to the examples discussed in Part B, North Carolina also has a constitution that restricts expenditures and borrowings. See Robert C Lowry, A Visible Hand? Bond Markets, Political Parties, Balanced Budget Laws, and State Government Debt, 13 Econ. & Pol. 49, 53 (2001); Shaw, supra note 10; Donald B. Tobin, The Balanced Budget Amendment: Will Judges Become Accountants—A Look at State Experiences, 12 J.L. & Pol. 153, 158 (1996).Google Scholar

²⁴ An example of this is Colorado, which started with a property tax limit and then imposed a TEL that covered the whole economy. See Brown, Tom, Constitutional Tax and Expenditure Limitation in Colorado: The Impact on Municipal Governments, 20 Pub. Budgeting & Fin. 29, 30 (2000).Google Scholar

²⁵ On the myriad of possible TEL permutations, see Thad Kousser et al., For Whom the TEL Tolls: Can State Tax and Expenditure Limits Effectively Reduce Spending?, 8 St. Pol. & Pol'y Q. 331, 358 (2008); Daniel R. Mullins & Bruce A. Wallin, Tax and Expenditure Limitations: Introduction and Overview, 24 Pub. Budgeting & Fin. 2, 3 (2004).Google Scholar

²⁶ I describe these relaxations in this section.Google Scholar

²⁷ See Savage, James D., California's Structural Deficit Crisis, 12 Pub. Budgeting & Fin. 82 (1992).Google Scholar

²⁸ See Doerr, David R., The California Legislature's Response to Proposition 13, 53 S. Cal. L. Rev. 77, 78 (1979); Juliet Musso et al., State Budgetary Processes and Reforms: The California Story, 26 Pub. Budgeting & Fin. 1 (2006).Google Scholar

²⁹ I do not argue that a “pure” limit without amendments would be superior; it is not possible to test this counter-factual. I merely argue that the amendments have created sub-optimal outcomes in some respects.Google Scholar

³⁰ See Kirlin, John J., Impact of Fiscal Limits on Governance, 25 Hastings Const. L.Q. 197, 201 (1998); Savage, supra note 27.Google Scholar

³¹ See the “ratcheting up” effect documented in Kirlin, supra note 30; Musso et al., supra note 28; Juliet Musso & John Quigley, Fiscal Federalism and Health Care Provision in California, in Government for the Future 103 (Ake E. Andersson ed., 1997).Google Scholar

³² See Kirlin, supra note 30; Musso et al., supra note 28; Musso & Quigley, supra note 31.Google Scholar

³³ See Musso et al., supra note 28, at 20.Google Scholar

³⁴ For a discussion of how BBRs can produce unexpected results, including additional pork barreling, see Matthew J. Gabel & Gregory L. Hager, How to Succeed at Increasing Spending Without Really Trying: The Balanced Budget Amendment and the Item Veto, 102 Pub. Choice 19, 21 (2000).Google Scholar

³⁵ See Kirlin, supra note 30, at 207–08.Google Scholar

³⁶ See Musso et al., supra note 28.Google Scholar

³⁷ Id. Google Scholar

³⁸ See Kirlin, supra note 30.Google Scholar

³⁹ TABOR is in the Colorado Constitution. Colo. Const. art. X, § 20.Google Scholar

⁴⁰ See Collins, Richard B., The Colorado Constitution in the New Century, 78 U. Colo. L. Rev. 1265, 1334 (2007).Google Scholar

⁴¹ See Colo. Const. art. X, § 20(7).Google Scholar

⁴² See Brown, supra note 24.Google Scholar

⁴³ See Colo. Const. art. X, § 20(7)(d).Google Scholar

⁴⁴ This came through Referendum C in 2005. Referendum C allows the state to spend excess revenue on services such as health care, public education, and transportation. The Colorado government reports the revenue here at http://www.colorado.gov/cs/Satellite/Treasury_v2/CBON/1251592160342. For a discussion, see Collins, supra note 41; Christine R. Martell & Paul Teske, Fiscal Management Implications of the TABOR Bind, 67 Pub. Admin. Rev. 673–75 (2007).Google Scholar

⁴⁵ See Brown, supra note 24; Kousser et al., supra note 25.Google Scholar

⁴⁶ See Gebhardt, Kathleen J., Challenges to Funding School Facilities in Colorado, 83 Neb. L. Rev. 856, 863 (2005); Staff of Colorado Legislative Council, Issue Brief 03–06: How Colorado Compares in K-12 Funding (1999).Google Scholar

⁴⁷ See Fox, William F., The Ongoing Evolution of State Revenue Systems, 88 Marq. L. Rev. 19, 19 (2004).Google Scholar

⁴⁸ See McGuire, Therese J. & Rueben, Kim S., The Colorado Revenue Limit: The Economic Effects of TABOR (Economic Policy Institute, Briefing Paper No. 172, Mar. 23, 2006).Google Scholar

⁴⁹ Id. Google Scholar

⁵⁰ For an analysis of the impact of the downturn in the 2000s on Colorado, see Martell & Teske, supra note 45; Franklin James & Allan Wallis, Tax and Spending Limits in Colorado, 24 Pub. Budgeting & Fin. 16, 25 (2004).Google Scholar

⁵¹ See Fox, supra note 47.Google Scholar

⁵² See United States v. Winstar Corp., 518 U.S. 839, 872 (1996).Google Scholar

⁵³ For a discussion of the nature of such entrenching provisions, see John O. McGinnis & Michael B. Rappaport, The Constitutionality of Legislative Supermajority Requirements: A Defense, 105 Yale L.J. 483, 486 (1995); Eric A. Posner & Adrian Vermeule, Legislative Entrenchment: A Reappraisal, 111 Yale L.J. 1665 (2002); Michael J. Klarman, The Majoritarian Judicial Review, 85 Geo. L.J. 491, 509 (1997); John C. Roberts & Erwin Chemerinsky, Entrenchment of Ordinary Legislation: A Reply to Professors Posner and Vermeule, 91 Calif. L. Rev. 1773, 1784 (2003).Google Scholar

⁵⁴ See McGinnis & Rappaport, supra note 53, at 504–05.Google Scholar

⁵⁵ Id. Google Scholar

⁵⁶ This type of “dynamic” constitutional interpretation has not received universal support. See generally Richard H. Fallon, A Constructivist Coherence Theory of Constitutional Interpretation, 100 Harv. L. Rev. 1189, 1205 (1987); John G. Wofford, The Blinding Light: The Uses of History in Constitutional Interpretation, 31 U. Chi. L. Rev. 502, 503-04 (1964); David L. Faigman, “Normative Constitutional Fact-Finding”: Exploring the Empirical Component of Constitutional Interpretation, 139 U. Pa. L. Rev. 541, 607 (1991).Google Scholar

⁵⁷ See McGinn is & Rappaport, supra note 53.Google Scholar

⁵⁸ See Posner & Vermeule, supra note 53, at 1680–81.Google Scholar

⁵⁹ See Frickey, Philip P., Structuring Purposive Statutory Interpretation: An American Perspective, 80 Australian LJ. 849, 849 (2006).Google Scholar

⁶⁰ See Mark L. Humphery-Jenner, Should Common Law Doctrines Dynamically Guide the Interpretation of Statutes?, 3 Legisprudence 171, 172 (2009).Google Scholar

⁶¹ I note that these are reconcilable; however, the notion that the original framers wrote the strict text with the intention that it receives a dynamic interpretation has received tentative, but not uniform, support. See Jack M. Balkin, Framework Originalism and the Living Constitution, 103 Nw. U. L. Rev. 549, 558 (2009).Google Scholar

⁶² For a full summary of the operation of dynamic interpretation, and the arguments for and against it, see Mark L. Humphery-Jenner, Securities Fraud Compensation: A Legislative Scheme Drawing on China, the US and the UK, 38 Legal Issues Econ. Integration 143 (2011); Randal Graham, A Unified Theory of Statutory Interpretation, 23 Stat. L. Rev. 91 (2002); William N. Eskridge, Dynamic Statutory Interpretation, 135 U. Pa. L. Rev. 1479 (1987).Google Scholar

⁶³ For example, Australia implicitly permits dynamic statutory interpretations in the Acts Interpretation Act 1901 (Cth) s 15AA (Austl.). This has also received some broad support in common law jurisdictions generally and in the United States. See Graham, supra note 62; Humphery-Jenner, supra note 60; Eskridge, supra note 62; William N. Eskridge, Public Values in Statutory Interpretation, 137 U. Pa. L. Rev. 1007, 1018 (1989); William N. Eskridge & Philip P. Frickey, Statutory Interpretation as Practical Reasoning, 42 Stan. L. Rev. 321, 345 (1990); Frickey, supra note 59; Cass R. Sunstein, Interpreting Statutes in the Regulatory State, 103 Harv. L. Rev. 405, 493 (1989).Google Scholar

⁶⁴ See the objections in Rehnquist, William H., Notion of a Living Constitution, 54 Tex. L. Rev. 693, 695 (1976); Arthur Selwyn Miller, Notes on the Concept of the Living Constitution, 31 Geo. Wash. L. Rev. 881 (1963).Google Scholar

⁶⁵ See Adams, Arlin M., Justice Brennan and the Religion Clauses: The Concept of a “Living Constitution”, 139U. Pa. L. Rev. 1319, 30 (1991); Balkin, supra note 61.Google Scholar

⁶⁶ For example, in Australia, the parliament has the power to make laws with respect to defense. See Australian Constitution s 51(vii). Courts have held that the government cannot simply define a law as being with respect to defense, i.e., what constitutes “defense.” See Australian Communist Party v Commonwealth (Communist Party Case) (1951) 83 CLR 1, 262 (Austl.).Google Scholar

⁶⁷ See Fisher v Fisher (1986) 161 CLR 376, 455–56 (Austl.); Posner & Vermeule, supra note 54, at 1680–81; Ian Ireland, The High Court and the Meaning of “Marriage“ in Section 51(xxi) of the Constitution (Parliament of Australia: Law and Bills Digest Group, Research Note 17 2001–02, Feb. 17, 2002).Google Scholar

⁶⁸ See Pearce, D.C. & Geddes, R.S., Statutory Interpretation in Australia (7th ed. 2011).Google Scholar

⁶⁹ Id. at 335–36.Google Scholar

⁷⁰ See Hou & Smith, supra note 21.Google Scholar

⁷¹ See Ellickson, Robert C., Law and Economics Discovers Social Norms, 27 J. Legal Stud. 537 (1998).Google Scholar

⁷² The public choice literature suggests that the threat of poor polling can be a significant disincentive. See Posner, Richard, Economic Analysis of Law (2nd ed. 1977).Google Scholar

⁷³ See Ellickson, supra note 71, at 540–41.Google Scholar

⁷⁴ See Posner, Eric A., Law and Social Norms: The Case of Tax Compliance, 86 Va. L. Rev. 1781, 1796 (2000).Google Scholar

⁷⁵ See Eisenberg, Melvin A., Corporate Law and Social Norms, 99 Colum. L. Rev. 1253, 1255 (1999).Google Scholar

⁷⁶ See Hou & Smith, supra note 21.Google Scholar

⁷⁷ I do not consider the Northern Territory and the Australian Capital Territory as they do not have full state status. The federal government may intervene in the affairs of territories and overrule their legislation; however, it cannot do so for states.Google Scholar

⁷⁸ This is in the Fiscal Responsibility Act 2005 No. 41 (NSW) (Austl.), which follows the General Government Debt Elimination Act 1995 No. 83 (NSW) (Austl.).Google Scholar

⁷⁹ On the prior position See Thomas, D.J., Insolvency and the State of Victoria, 12 Econ. Papers 63 (1993).Google Scholar

⁸⁰ In 2000, the Financial Management (Financial Responsibility) Act 2000 (VIC) (Austl.) inserted Sections 23C and 23D into the Financial Management Act 1994 No. 18 (VIC) (Austl.), which require the government to operate following the enumerate principles of sound financial management.Google Scholar

⁸¹ See Financial Accountability Act 2009 (QLD) s 11 (Austl.).Google Scholar

⁸² See Charter of Fiscal Responsibility (Jul. 28, 2010), available at http://www.treasury.qld.gov.au/office/knowledge/docs/charter-of-fiscal-responsibility/index.shtml (last visited Apr. 29, 2012).Google Scholar

⁸³ See Financial Accountability Act 2009 (QLD) s 11(3) (Austl.).Google Scholar

⁸⁴ See Charter of Budget Responsibility Act 2007 (TAS) sch 1, pt 1, s 1 (Austl.).Google Scholar

⁸⁵ See Charter of Budget Responsibility Act 2007 (TAS) sch 1, pt 3, s 3 (Austl.).Google Scholar

⁸⁶ See Charter of Budget Responsibility Act 2007 (TAS) s 3(2) (Austl.).Google Scholar

⁸⁷ See Government Financial Responsibility Act 2000 (WA) s 10(1) (Austl.).Google Scholar

⁸⁸ The principles are in Government Financial Responsibility Act 2000 (WA) s 6 (Austl.).Google Scholar

⁸⁹ See Government Financial Responsibility Act 2000 (WA) s 3(2) (Austl.).Google Scholar

⁹⁰ See Novak, Julie, Next Generation State Budgets: Stronger Fiscal Rules for Better Budgetary Outcomes and More Prosperous States 2011 Inst. Pub. Aff. 1, 24. Further, the Sustainable Budget Commission notes that the extent and nature of budget savings is a matter for government discretion. See Commission, Sustainable Budget, 2 Budget Improvement Measures: Restoring Sustainable State Finances (2010).Google Scholar

⁹¹ Sustainable Budget Commission, supra note 90, at s I.Google Scholar

⁹² See id. at intro.Google Scholar

⁹³ See Velasco, Andres, Debts and Deficits with Fragmented Fiscal Policymaking, 76 J. Pub. Econ. 105, 106 (2000). However, “pork barreling” has arguably become a less dominant determinant of budget deficits. See Alison F. Del Rossi, The Politics and Economics of Pork Barrel Spending: The Case of Federal Financing of Water Resources Development, 85 Pub. Choice 285 (1995).Google Scholar

⁹⁴ For a criticism of “aspirational targets” in the European context, see Egenhofer, Christian, Ctr. Eur. Pol'y Stud., Looking for the Cure-All? Targets and the EU's New Energy Strategy 118 (CEPS Policy Briefs, 2007).Google Scholar

⁹⁵ This follows from the finance literature, which documents how the absence of constraints on expenditure can lead to value-reducing investments. See, e.g., Jarrad Harford, Corporate Cash Reserves and Acquisitions, 54 J. Fin. 1969, 1996 (1999).Google Scholar

⁹⁶ This is consistent with the well-documented relation between agency conflicts and cash in a corporate context. Id.; Jarrad Harford et al., Corporate Governance and Firm Cash Holdings in the US, 87 J. Fin. Econ. 535, 537 (2008); Michael C. Jensen, Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers, 76 Am. Econ. Rev. 323 (1986).Google Scholar

⁹⁷ Compare Ronald W. Masulis et al., Corporate Governance and Acquirer Returns, 62 J. Fin. 1851 (2007), with Ronald W. Masulis et al., Agency Problems at Dual-Class Companies, 64 J. Fin. 1697 (2009).Google Scholar

⁹⁸ See Sandilands, Ben, The Killing of Sydney, Drum Opinion (June 2, 2010), http://www.abc.net.au/unleashed/34734.html (last visited May 5, 2012); Louise Hall, Metro Damages Bill: $330m, 350 Jobs, Sydney Morning Herald, Jun. 2, 2010.Google Scholar

⁹⁹ See Carter, Bridget, Leighton Holdings CEO Wal King Warns NSW Premier Keneally over Metro, Australian Feb. 12, 2010.Google Scholar

¹⁰⁰ For the approach to “discount rates” used in valuation of public-private-partnerships in New South Wales, see New South Wales Treasury, Determination of Appropriate Discount Rates for the Evaluation of Private Financing roposals (Technical Paper, February 2007), available at http://www.wwg.nsw.gov.au/__data/assets/pdf_file/0011/3107/discount.pdf. The approach has several problems including: Failure to adjust for changes in project-risk and capital structure over time; the possibility of arbitrary adjustments to key inputs into discount rates; the reliance on market-based models to value an asset that will not be listed; and the use of inputs such as “beta,” which are difficult to determine due to the lack of publicly available companies on which to base a “beta” estimate (as would be standard practice for a “pure play” beta). These could issues induce inaccurate valuations. See Tim Koller et al., Valuation (4th ed. 2005); James R. Hitchner, Financial Valuation (2006).Google Scholar

¹⁰¹ As documented in Jensen, Michael C., Agency Costs of Overvalued Equity, 34 Fin. Mgmt. 5 (2005); Jensen, supra note 96; Harford, supra note 95; Harford et al., supra note 96; Edward Lee & Ronan Powell, Excess Cash Holdings and Shareholder Value, 51 Acct. & Fin. 549 (2011); Steven V. Mann & Neil W. Shicherman, The Agency Costs of Free Cash Flow: Acquisition Activity and Equity Issues, 64 J. Bus. 213 (1991).Google Scholar

¹⁰² See Treasury, Queensland, Mid Year Fiscal and Economic Review (2011), available at http://www.treasury.qld.gov.au/office/knowledge/docs/mid-year-review/mid-year-review-2010-11.pdf.Google Scholar

¹⁰³ See Hurst, Daniel, State Budget 2010: Big Spend, Big Deficit, Brisbane Times, Jun. 8, 2010; Tony Moore & Daniel Hurst, Queensland State Budget Deficit to Last Eight Years, Brisbane Times Jun. 16, 2009; Queensland Treasury, State Budget 2009–2010: Capital Statement (2009), available at http://www.budget.qld.gov.au/previous-budgets/2009-10/budget-papers/bp3.shtml.Google Scholar

¹⁰⁴ This concern, inter alia, encouraged the Federal Government to undertake the National Disaster Insurance Review, details of which are available from at http://www.ndir.gov.au/content/Content.aspx?doc=tor.htm Google Scholar

¹⁰⁵ See Eric M. Leeper et al., Government Investment and Fiscal Stimulus, 57 J. Monetary Econ. 1000 (2010); W. Max Corden, The Theory of the Fiscal Stimulus: How Will a Debt-financed Stimulus Affect the Future?, 26 O. Rev. Econ. Pol'y 38 (2010).Google Scholar

¹⁰⁶ This was a publicly-stated rationale for the stimulus spending. See Coorey, Phillip, Saving the Nation, Sydney Morning Herald, Feb. 4, 2009; Wayne Swan, Treasurer of the Commonwealth of Australia, Budget Speech 2009-2010 (May 12, 2009).Google Scholar

¹⁰⁷ See Fed. Reserve Bank of N.Y., U.S. Monetary Policy and Financial Markets 20 (1998).Google Scholar

¹⁰⁸ See Corsetti & Roubini, supra note 12.Google Scholar