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Copycatting: Fiscal Policies Of States And Their Neighbors

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Author Info

  • CASE, A.C.
  • HINES, J.R.J.
  • ROSEN, H.S.

Abstract

This paper formalizes and tests the notion that state governments' expenditures depend on the spending of similarly situated states. We find that even after allowing for fixed state effects, year effects, and common random effects between neighbors, as state government's level of per capita expenditure is positively and significantly affected by the expenditure levels of its neighbors. Ceteris paribus, a one dollar increase in a state's neighbors' expenditures increases its own expenditure by over 70 cents.

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Bibliographic Info

Paper provided by Princeton, Woodrow Wilson School - Discussion Paper in its series Papers with number 37.

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Length: 33 pages
Date of creation: 1989
Date of revision:
Handle: RePEc:fth:priwdp:37

Contact details of provider:
Postal: PRINCETON UNIVERSITY, WOODROW WILSON SCHOOL OF PUBLIC AND INTERNATIONAL AFFAIRS, DEPARTMENT OF ECONOMICS, PRINCETON NEW-JERSEY 08542 U.S.A.
Phone: (609) 258-4800
Web page: http://www.wws.princeton.edu/
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Related research

Keywords: tests ; public expenditures ; fiscal policy;

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References

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  1. J. Richard Aronson & James R. Marsden, 1980. "Duplicating Moody's Municipal Credit Ratings," Public Finance Review, , vol. 8(1), pages 97-106, January.
  2. Dennis Mueller & Peter Murrell, 1986. "Interest groups and the size of government," Public Choice, Springer, vol. 48(2), pages 125-145, January.
  3. Steven G. Craig & Robert P. Inman, 1985. "Education, Welfare, and the "New" Federalism: State Budgeting in a Federalist Public Economy," NBER Working Papers 1562, National Bureau of Economic Research, Inc.
  4. Edward M. Gramlich & Deborah S. Laren, 1984. "Migration and Income Redistribution Responsibilities," Journal of Human Resources, University of Wisconsin Press, vol. 19(4), pages 489-511.
  5. Gramlich, Edward M & Rubinfeld, Daniel L, 1982. "Micro Estimates of Public Spending Demand Functions and Tests of the Tiebout and Median-Voter Hypotheses," Journal of Political Economy, University of Chicago Press, vol. 90(3), pages 536-60, June.
  6. Johnson, William R, 1988. "Income Redistribution in a Federal System," American Economic Review, American Economic Association, vol. 78(3), pages 570-73, June.
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Cited by:
  1. Phillip B. Levine & David J. Zimmerman, 1995. "An Empirical Analysis of the Welfare Magnet Debate Using the NLSY," NBER Working Papers 5264, National Bureau of Economic Research, Inc.
  2. David M. Cutler & Douglas W. Elmendorf & Richard J. Zeckhauser, 1993. "Demographic Characteristics and the Public Bundle," NBER Working Papers 4283, National Bureau of Economic Research, Inc.
  3. Eberts, Randall W. & Gronberg, Timothy J., 1990. "Structure, Conduct, and Performance in the Local Public Sector," National Tax Journal, National Tax Association, vol. 43(2), pages 165-73, June.
  4. Reuven Glick & Michael Hutchison, 1993. "Fiscal policy in monetary unions: Implications for Europe," Open Economies Review, Springer, vol. 4(1), pages 39-65, March.
  5. Geys, Benny, 2006. "Looking across borders: A test of spatial policy interdependence using local government efficiency ratings," Journal of Urban Economics, Elsevier, vol. 60(3), pages 443-462, November.
  6. Heyndels, Bruno & Vuchelen, Jef, 1998. "Tax Mimicking Among Belgian Municipalities," National Tax Journal, National Tax Association, vol. 51(n. 1), pages 89-101, March.
  7. Cull, Robert, 1998. "How deposit insurance affects financial depth : a cross-country analysis," Policy Research Working Paper Series 1875, The World Bank.
  8. David Bell & Sangyoung Song, 2007. "Neighborhood effects and trial on the internet: Evidence from online grocery retailing," Quantitative Marketing and Economics, Springer, vol. 5(4), pages 361-400, December.

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