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Separation of Powers and the Size of Government in the U.S. States 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.Length: 41 pages

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  • Leandro De Magalhães
  • Lucas Ferrero

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    File URL: http://www.bristol.ac.uk/cmpo/publications/papers/2012/wp285.pdf
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    Paper provided by Department of Economics, University of Bristol, UK in its series The Centre for Market and Public Organisation with number 12/285.

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    Date of creation: Mar 2012
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    Handle: RePEc:bri:cmpowp:12/285

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    Keywords: Separation of powers; divided government; line-item veto; tax level; semiparametric; regression discontinuity design;

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    1. Gene M. Grossman & Elhanan Helpman, 2006. "Separation of Powers and the Budget Process," Harvard Institute of Economic Research Working Papers 2119, Harvard - Institute of Economic Research.
    2. Aidt, T.S. & Shvets, J., 2011. "Distributive Politics and Electoral Incentives: Evidence from Seven US State Legislatures," Cambridge Working Papers in Economics 1130, Faculty of Economics, University of Cambridge.
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    15. Carter, John R & Schap, David, 1990. "Line-Item Veto: Where Is Thy Sting?," Journal of Economic Perspectives, American Economic Association, vol. 4(2), pages 103-18, Spring.
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    17. Burton Abrams & William Dougan, 1986. "The effects of constitutional restraints on governmental spending," Public Choice, Springer, vol. 49(2), pages 101-116, January.
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