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Does the distribution of New Deal spending reflect an optimal provision of public goods?

Author

Listed:
  • Jason Taylor

    (Central Michigan University)

  • Fred Bateman

    (Terry College of Business, University of Georgia)

Abstract

Since 1969 more than a dozen studies have explored the grossly unequal state-level distribution of New Deal spending. Why did small population rural states such as Nevada, Montana, and Wyoming receive up to six times as many federal dollars per capita as densely populated states such as Connecticut, Rhode Island, and New York? Empirical studies employing economic and political variables have had mixed results in explaining this distribution. What past studies neglect is that a large proportion of New Deal dollars went towards the creation of public goods, which had spillover effects particularly upon those who lived in close proximity to these projects. This note suggests that the state-level distribution of per capita expenditures during the 1930s is consistent with what would be expected to follow from an economically efficient allocation of public goods.

Suggested Citation

  • Jason Taylor & Fred Bateman, 2007. "Does the distribution of New Deal spending reflect an optimal provision of public goods?," Economics Bulletin, AccessEcon, vol. 8(3), pages 1-5.
    • Handle: RePEc:ebl:ecbull:eb-07h40002
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    References listed on IDEAS

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    Cited by:

    1. Jim F. Couch & David L. Black & Philip A. Burton, 2009. "Efficiency considerations and the allocation of new deal funds: an examination of the public goods explanation of expenditure patterns," Economics Bulletin, AccessEcon, vol. 29(4), pages 3126-3133.

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    More about this item

    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • N4 - Economic History - - Government, War, Law, International Relations, and Regulation

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