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Partisan Conflict and Government Spending - New Evidence From the United States

Author

Listed:
  • Xuan Hu
  • Agus Salim
  • Kai Shi
  • Meng Yan

    (School of Economics, Jilin University, China)

Abstract

To understand and address the issue of how political party disagreement affects the dynamics of fiscal policy, we investigate the potential link between partisan conflict and government spending in the United States. We find that one standard deviation shock of the partisan conflict index reduces aggregate and disaggregated government spending, except in the health and general public service sectors, with the greatest reduction in the education sector.

Suggested Citation

  • Xuan Hu & Agus Salim & Kai Shi & Meng Yan, 2022. "Partisan Conflict and Government Spending - New Evidence From the United States," Asian Economics Letters, Asia-Pacific Applied Economics Association, vol. 3(3), pages 1-8.
    • Handle: RePEc:ayb:jrnael:73
    DOI: 2022/08/21
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    References listed on IDEAS

    as
    1. Alan J. Auerbach & Yuriy Gorodnichenko, 2012. "Measuring the Output Responses to Fiscal Policy," American Economic Journal: Economic Policy, American Economic Association, vol. 4(2), pages 1-27, May.
    2. Azzimonti, Marina, 2018. "Partisan conflict and private investment," Journal of Monetary Economics, Elsevier, vol. 93(C), pages 114-131.
    3. Azzimonti, Marina, 2019. "Does partisan conflict deter FDI inflows to the US?," Journal of International Economics, Elsevier, vol. 120(C), pages 162-178.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Xin Sheng & Rangan Gupta, 2022. "The State-Level Nonlinear Effects of Government Spending Shocks in the US: The Role of Partisan Conflict," Sustainability, MDPI, vol. 14(18), pages 1-9, September.

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    More about this item

    Keywords

    historical decomposition; vector autoregression; partisan conflict index; government spending;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents

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