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Government Spending, Shocks, and the Role of Legislature Size: Evidence from the American States

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  • William B. Hankins

Abstract

type="main"> I examine the relationship between legislature size and several components of government spending using a methodology that allows me to estimate how legislature size influences the fiscal response to shocks that are common to all states. I use nonlinear least squares on a panel of 48 of the 50 American states over the period 1978–2008. I find little evidence that states with larger than average lower or upper chambers experience a larger change in spending per capita in the presence of a shock. I do find a positive relationship between lower chamber size and the first difference of welfare spending per capita, but this increase is partially offset by a negative relationship between upper chamber size and welfare spending. These results are consistent with the interest groups theory of government, which states that larger legislatures can be associated with lobbying and bargaining costs that may have offsetting effects.

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  • William B. Hankins, 2015. "Government Spending, Shocks, and the Role of Legislature Size: Evidence from the American States," Social Science Quarterly, Southwestern Social Science Association, vol. 96(4), pages 1059-1070, December.
  • Handle: RePEc:bla:socsci:v:96:y:2015:i:4:p:1059-1070
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    File URL: http://hdl.handle.net/10.1111/ssqu.12157
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    References listed on IDEAS

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    1. Gilligan, Thomas W. & Matsusaka, John G., 2001. "Fiscal Policy, Legislature Size, and Political Parties: Evidence from State and Local Governments in the First Half of the 20th Century," National Tax Journal, National Tax Association, vol. 54(n. 1), pages 57-82, March.
    2. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages 1-33, March.
    3. Peter Egger & Marko Koethenbuerger, 2010. "Government Spending and Legislative Organization: Quasi-experimental Evidence from Germany," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 200-212, October.
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    7. Gian Maria Milesi-Ferretti & Roberto Perotti & Massimo Rostagno, 2002. "Electoral Systems and Public Spending," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 609-657.
    8. Pettersson-Lidbom, Per, 2012. "Does the size of the legislature affect the size of government? Evidence from two natural experiments," Journal of Public Economics, Elsevier, vol. 96(3), pages 269-278.
    9. Gilligan, Thomas W & Matsusaka, John G, 1995. "Deviations from Constituent Interests: The Role of Legislative Structure and Political Parties in the States," Economic Inquiry, Western Economic Association International, vol. 33(3), pages 383-401, July.
    10. Nadia Fiorino & Roberto Ricciuti, 2007. "Legislature size and government spending in Italian regions: Forecasting the effects of a reform," Public Choice, Springer, vol. 131(1), pages 117-125, April.
    11. David M. Primo, 2006. "Stop Us Before We Spend Again: Institutional Constraints On Government Spending," Economics and Politics, Wiley Blackwell, vol. 18(3), pages 269-312, November.
    12. Beatriz Maldonado, 2013. "Legislatures, Leaders, and Leviathans: How Constitutional Institutions Affect the Size of Government Spending," Social Science Quarterly, Southwestern Social Science Association, vol. 94(4), pages 1102-1123, December.
    13. Gilligan, Thomas W. & Matsusaka, John G., 2001. "Fiscal Policy, Legislature Size, and Political Parties: Evidence From State and Local Governments in the First Half of the 20th Century," National Tax Journal, National Tax Association;National Tax Journal, vol. 54(1), pages 57-82, March.
    14. Bradbury, John Charles & Crain, W. Mark, 2001. "Legislative organization and government spending: cross-country evidence," Journal of Public Economics, Elsevier, vol. 82(3), pages 309-325, December.
    15. Weingast, Barry R & Shepsle, Kenneth A & Johnsen, Christopher, 1981. "The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 642-664, August.
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    Cited by:

    1. Paul Pecorino, 2018. "Supermajority rule, the law of 1/n, and government spending: a synthesis," Public Choice, Springer, vol. 175(1), pages 19-36, April.

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