Pick Your Poison: Do Politicians Regulate When They Can’t Spend?
AbstractWe investigate whether laws restricting fiscal policies across U.S. states lead politicians to adopt more partisan regulatory policy instead. We first show that partisan policy outcomes do exist across U.S. states, with Republicans cutting taxes and spending and Democrats raising them. We then demonstrate that these partisan policy outcomes are moderated in states with no-carry restrictions on public deficits. Lastly, we test whether unified Republican or Democratic state governments regulate more when constrained by no-carry restrictions. We find no-carry laws restrict partisan fiscal outcomes but tend to lead to more partisan regulatory outcomes.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 37430.
Date of creation: Feb 2012
Date of revision:
Regulation; Taxation; Local Public Finance; U.S. States; Balanced Budget Rules;
Find related papers by JEL classification:
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
- H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-03-28 (All new papers)
- NEP-POL-2012-03-28 (Positive Political Economics)
- NEP-REG-2012-03-28 (Regulation)
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