IDEAS home Printed from https://ideas.repec.org/p/bri/cmpowp/12-285.html
   My bibliography  Save this paper

Separation of Powers and the Size of Government in the U.S. States

Author

Listed:
  • Leandro De Magalhães
  • Lucas Ferrero

Abstract

According to our model effective 'budgetary' separation of power occurs in the states with the line-item veto when the Governor is not aligned with the Legislature. Only then is the Legislature, which approves the budget and sets the tax level, not the full residual claimant of a tax release. The tax level is determined by the overlap between the supporters of the Governor and the supporters of the legislative majority. The model generates a discontinuous and non-linear relationship between the tax level and the degree of alignment between Governor and Legislature. We find support in the data for this non-linear relationship and show that the discontinuity can be interpreted as a causal effect.

Suggested Citation

  • Leandro De Magalhães & Lucas Ferrero, 2012. "Separation of Powers and the Size of Government in the U.S. States," The Centre for Market and Public Organisation 12/285, The Centre for Market and Public Organisation, University of Bristol, UK.
    • Handle: RePEc:bri:cmpowp:12/285
    as

    Download full text from publisher

    File URL: http://www.bristol.ac.uk/cmpo/publications/papers/2012/wp285.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Fernando Ferreira & Joseph Gyourko, 2009. "Do Political Parties Matter? Evidence from U.S. Cities," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(1), pages 399-422.
    2. Timothy Besley & Anne Case, 2003. "Political Institutions and Policy Choices: Evidence from the United States," Journal of Economic Literature, American Economic Association, vol. 41(1), pages 7-73, March.
    3. Toke S. Aidt & Julia Shvets, 2012. "Distributive Politics and Electoral Incentives: Evidence from Seven US State Legislatures," American Economic Journal: Economic Policy, American Economic Association, vol. 4(3), pages 1-29, August.
    4. Torsten Persson & Gerard Roland & Guido Tabellini, 2000. "Comparative Politics and Public Finance," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1121-1161, December.
    5. Robinson, Peter M, 1988. "Root- N-Consistent Semiparametric Regression," Econometrica, Econometric Society, vol. 56(4), pages 931-954, July.
    6. Pagan,Adrian & Ullah,Aman, 1999. "Nonparametric Econometrics," Cambridge Books, Cambridge University Press, number 9780521355643.
    7. Alt, James E. & Lowry, Robert C., 1994. "Divided Government, Fiscal Institutions, and Budget Deficits: Evidence from the States," American Political Science Review, Cambridge University Press, vol. 88(4), pages 811-828, December.
    8. Alm, James & Evers, Mark, 1991. "The Item Veto and State Government Expenditures," Public Choice, Springer, vol. 68(1-3), pages 1-15, January.
    9. Grossman, Gene M. & Helpman, Elhanan, 2008. "Separation of powers and the budget process," Journal of Public Economics, Elsevier, vol. 92(3-4), pages 407-425, April.
    10. Poterba, James M, 1994. "State Responses to Fiscal Crises: The Effects of Budgetary Institutions and Politics," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 799-821, August.
    11. Bohn, Henning & Inman, Robert P., 1996. "Balanced-budget rules and public deficits: evidence from the U.S. states," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 45(1), pages 13-76, December.
    12. Carter, John R & Schap, David, 1990. "Line-Item Veto: Where Is Thy Sting?," Journal of Economic Perspectives, American Economic Association, vol. 4(2), pages 103-118, Spring.
    13. Guido Imbens & Karthik Kalyanaraman, 2012. "Optimal Bandwidth Choice for the Regression Discontinuity Estimator," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 79(3), pages 933-959.
    14. Gian Maria Milesi-Ferretti & Roberto Perotti & Massimo Rostagno, 2002. "Electoral Systems and Public Spending," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(2), pages 609-657.
    15. Lee, David S., 2008. "Randomized experiments from non-random selection in U.S. House elections," Journal of Econometrics, Elsevier, vol. 142(2), pages 675-697, February.
    16. Stephen Ansolabehere & James M. Snyder, 2006. "Party Control of State Government and the Distribution of Public Expenditures," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(4), pages 547-569, December.
    17. Leigh, Andrew, 2008. "Estimating the impact of gubernatorial partisanship on policy settings and economic outcomes: A regression discontinuity approach," European Journal of Political Economy, Elsevier, vol. 24(1), pages 256-268, March.
    18. Burton Abrams & William Dougan, 1986. "The effects of constitutional restraints on governmental spending," Public Choice, Springer, vol. 49(2), pages 101-116, January.
    19. Reed, W. Robert, 2006. "Democrats, republicans, and taxes: Evidence that political parties matter," Journal of Public Economics, Elsevier, vol. 90(4-5), pages 725-750, May.
    20. Holtz-Eakin, Douglas, 1988. "The line item veto and public sector budgets : Evidence from the states," Journal of Public Economics, Elsevier, vol. 36(3), pages 269-292, August.
    21. Torsten Persson & Guido Tabellini, 2004. "Constitutional Rules and Fiscal Policy Outcomes," American Economic Review, American Economic Association, vol. 94(1), pages 25-45, March.
    22. Shugart,Matthew Soberg & Carey,John M., 1992. "Presidents and Assemblies," Cambridge Books, Cambridge University Press, number 9780521429900.
    23. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, vol. 69(1), pages 201-209, January.
    24. Shugart,Matthew Soberg & Carey,John M., 1992. "Presidents and Assemblies," Cambridge Books, Cambridge University Press, number 9780521419628.
    25. Elisabeth R Gerber & Daniel J Hopkins, 2011. "When Mayors Matter: Estimating the Impact of Mayoral Partisanship on City Policy," American Journal of Political Science, John Wiley & Sons, vol. 55(2), pages 326-339, April.
    26. Richard Schmalensee & Thomas M. Stoker, 1999. "Household Gasoline Demand in the United States," Econometrica, Econometric Society, vol. 67(3), pages 645-662, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Leandro De Magalhães & Lucas Ferrero, 2015. "Separation of powers and the tax level in the U.S. states," Southern Economic Journal, John Wiley & Sons, vol. 82(2), pages 598-619, October.
    2. Leandro M. De Magalhães & Lucas Ferrero, 2009. "Budgetary Separation of Powers in the American States and the Tax Level: A Regression Discontinuity Design," The Centre for Market and Public Organisation 09/225, The Centre for Market and Public Organisation, University of Bristol, UK.
    3. Niklas Potrafke, 2018. "Government ideology and economic policy-making in the United States—a survey," Public Choice, Springer, vol. 174(1), pages 145-207, January.
    4. Niklas Potrafke, 2017. "Government Ideology and Economic Policy-Making in the United States," CESifo Working Paper Series 6444, CESifo.
    5. Leandro M. de Magalhães, 2011. "Political Parties and the Tax Level in the American States: A Regression Discontinuity Design," Bristol Economics Discussion Papers 11/622, School of Economics, University of Bristol, UK.
    6. Darío Cestau, 2018. "The political affiliation effect on state credit risk," Public Choice, Springer, vol. 175(1), pages 135-154, April.
    7. Beland, Louis-Philippe & Boucher, Vincent, 2015. "Polluting politics," Economics Letters, Elsevier, vol. 137(C), pages 176-181.
    8. Joaquín Artés & Ignacio Jurado, 2018. "Government fragmentation and fiscal deficits: a regression discontinuity approach," Public Choice, Springer, vol. 175(3), pages 367-391, June.
    9. Louis‐Philippe Beland & Bulent Unel, 2019. "Politics and entrepreneurship in the US," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(1), pages 33-57, February.
    10. Marta Curto-Grau (Universitat de Barcelona) & Albert Sole-Olle (Universitat de Barcelona) & Pilar Sorribas-Navarro(Universitat de Barcelona), 2012. "Partisan targeting of inter-governmental transfers & state interference in local elections: evidence from Spain," Working Papers in Economics 288, Universitat de Barcelona. Espai de Recerca en Economia.
    11. Louis-Philippe Beland & Sara Oloomi, 2017. "Party Affiliation And Public Spending: Evidence From U.S. Governors," Economic Inquiry, Western Economic Association International, vol. 55(2), pages 982-995, April.
    12. Marta Curto‐Grau & Albert Solé‐Ollé & Pilar Sorribas‐Navarro, 2017. "Does electoral competition curb party favoritism?," Working Papers 2017/04, Institut d'Economia de Barcelona (IEB).
    13. Per G. Fredriksson & Le Wang & Patrick L Warren, 2013. "Party Politics, Governors, and Economic Policy," Southern Economic Journal, John Wiley & Sons, vol. 80(1), pages 106-126, July.
    14. Marta Curto-Grau (Universitat de Barcelona) & Albert Sole-Olle (Universitat de Barcelona) & Pilar Sorribas-Navarro(Universitat de Barcelona), 2012. "Partisan targeting of inter-governmental transfers & state interference in local elections: evidence from Spain," Working Papers in Economics 288, Universitat de Barcelona. Espai de Recerca en Economia.
    15. Torsten Persson & Guido Tabellini, 2004. "Constitutions and Economic Policy," Journal of Economic Perspectives, American Economic Association, vol. 18(1), pages 75-98, Winter.
    16. Marta Curto-Grau & Albert Solé-Ollé & Pilar Sorribas-Navarro, 2012. "Partisan targeting of inter-governmental transfers & state interference in local elections: evidence from Spain," Working Papers 2012/31, Institut d'Economia de Barcelona (IEB).
    17. John A. Dove, 2017. "Property Tax Limits, Balanced Budget Rules, and Line-Item Vetoes: A Long-Run View," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 43(2), pages 288-317, March.
    18. Lucas Ferrero & Leandro M. de Magalhães, 2005. "Separation of Powers, Line Item Veto and the Tax Level: Evidence from the American States Draft 1," Working Papers 0031, Universidade Federal do Paraná, Department of Economics.
    19. Wenchi Wei, 2021. "State fiscal constraint and local overrides: a regression discontinuity design estimation of the fiscal effects," Public Choice, Springer, vol. 189(3), pages 347-373, December.
    20. Louis-Philippe Beland & Bulent Unel, 2018. "The impact of party affiliation of US governors on immigrants’ labor market outcomes," Journal of Population Economics, Springer;European Society for Population Economics, vol. 31(2), pages 627-670, April.

    More about this item

    Keywords

    Separation of powers; divided government; line-item veto; tax level; semiparametric; regression discontinuity design;
    All these keywords.

    JEL classification:

    • H00 - Public Economics - - General - - - General
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bri:cmpowp:12/285. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/cmbriuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.