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Allocating the US federal budget to the states: the impact of the President

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  • Valentino Larcinese
  • Leonzio Rizzo
  • Cecilia Testa

Abstract

This paper provides new evidence on the determinants of the US federal budget allocation to the states. Departing from the existing literature that gives prominence to Congress, we carry on an empirical investigation on the impact of Presidents during the period 1982-2000. Our findings suggest that the distribution of federal outlays to the States is affected by presidential politics. First, presidential elections matter. States that heavily supported the incumbent President in past presidential elections tend to receive more funds, while marginal and swing states are not rewarded. Second, party affiliation also plays an important role since states whose governor has the same political affiliation of the President receive more federal funds, while states opposing the president's party in Congressional elections are penalized. These results show that presidents are engaged in tactical distribution of federal funds and also provide good evidence in support of partisan theories of budget allocation.

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File URL: http://eprints.lse.ac.uk/3611/
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Bibliographic Info

Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 3611.

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Length: 35 pages
Date of creation: Jun 2005
Date of revision:
Handle: RePEc:ehl:lserod:3611

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Keywords: Federal Budget; Pork-Barrell; President; Congress; Political Parties; Committees; American Elections;

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  1. Wiji Arulampalam & Sugato Dasgupta & Amrita Dhillon & Bhaskar Dutta, 2008. "Electoral goals and center-state transfers: A Theoretical model and empirical evidence from India," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 08-14, Indian Statistical Institute, New Delhi, India.
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  3. Assar Lindbeck & Jörgen Weibull, 1987. "Balanced-budget redistribution as the outcome of political competition," Public Choice, Springer, vol. 52(3), pages 273-297, January.
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  6. Dahlberg, Matz & Johansson, Eva, 1999. "On the Vote Purchasing Behavior of Incumbent Governments," Working Paper Series 1999:24, Uppsala University, Department of Economics.
  7. Alvarez, Michael R. & Saving, Jason, 1995. "Congressional Committees and the Political Economy of Federal Outlays," Working Papers 898, California Institute of Technology, Division of the Humanities and Social Sciences.
  8. David Strömberg, 2004. "Radio's Impact on Public Spending," The Quarterly Journal of Economics, MIT Press, vol. 119(1), pages 189-221, February.
  9. Wallis, John Joseph, 1987. "Employment, Politics, and Economic Recovery during the Great Depression," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 516-20, August.
  10. Wright, Gavin, 1974. "The Political Economy of New Deal Spending: An Econometric Analysis," The Review of Economics and Statistics, MIT Press, vol. 56(1), pages 30-38, February.
  11. Atlas, Cary M, et al, 1995. "Slicing the Federal Government Net Spending Pie: Who Wins, Who Loses, and Why," American Economic Review, American Economic Association, vol. 85(3), pages 624-29, June.
  12. Anderson, Gary M & Tollison, Robert D, 1991. "Congressional Influence and Patterns of New Deal Spending, 1933-1939," Journal of Law and Economics, University of Chicago Press, vol. 34(1), pages 161-75, April.
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