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It's Good Weather for More Government: The Effect of Weather on Fiscal Policy

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Abstract

I show that weather conditions on election day affect future fiscal policy. When it rains during state elections, there is an increase in the relative income of voters, which is followed by an increase in expenditure and debt. The increase in expenditure is directed towards a larger police and safety budget. This result is compatible with a model of complementarity between consumption and public goods. In the model, high-income voters support an increase in safety budget because they benefit more from it than low-income voters.

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  • Gustavo de Souza, 2022. "It's Good Weather for More Government: The Effect of Weather on Fiscal Policy," Working Paper Series WP 2022-48, Federal Reserve Bank of Chicago.
    • Handle: RePEc:fip:fedhwp:95078
    DOI: 10.21033/wp-2022-48
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    More about this item

    Keywords

    public goods; Government size; fiscal policy; weather;
    All these keywords.

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • H0 - Public Economics - - General
    • H4 - Public Economics - - Publicly Provided Goods
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations

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