State Preparation for Recession: The Rainy Day Fund

The Capstone team evaluated the effectiveness of Rainy Day Funds on easing the fiscal stress experienced by state governments during a recession. As a result of the last recession which ended in 1992, states have created Rainy Day Funds as a mechanism to assist them alleviate fiscal stress in future recessions. The Rainy Day Fund’s operates by states putting money in these funds during an economic boom to help them in economic downturns. The Capstone team’s research seeks to find out whether state governments have done enough over the past years to prepare for the next recession.