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Formal and informal constraints on state government and economic freedom

Author

Listed:
  • Peter Calcagno

    (College of Charleston)

  • Joshua C. Hall

    (West Virginia University)

Abstract

Both formal and informal institutions can limit collective action. In the US context, there is a large literature on formal and informal institutions at the state level. The focus of this literature has generally been on whether these institutions constrain fiscal policy. Fiscal constraints on government activity are consistent with economic freedom, although economic freedom is a much broader concept. There is also a growing literature on the determinants of economic freedom. In this paper, we use data from 1983-2013 to quantify the extent to which formal and informal institutions can help explain the level of economic freedom across states. Our findings indicate that divided government and ideology can both constrain fiscal policy.

Suggested Citation

  • Peter Calcagno & Joshua C. Hall, 2020. "Formal and informal constraints on state government and economic freedom," Economics Bulletin, AccessEcon, vol. 40(1), pages 801-806.
    • Handle: RePEc:ebl:ecbull:eb-19-01055
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    References listed on IDEAS

    as
    1. Calcagno, Peter T. & López, Edward J., 2017. "Informal norms trump formal constraints: the evolution of fiscal policy institutions in the United States," Journal of Institutional Economics, Cambridge University Press, vol. 13(1), pages 211-242, March.
    2. Joshua C. Hall & Robert A. Lawson, 2014. "Economic Freedom Of The World: An Accounting Of The Literature," Contemporary Economic Policy, Western Economic Association International, vol. 32(1), pages 1-19, January.
    3. Poterba, James M., 1995. "Balanced Budget Rules and Fiscal Policy: Evidence From the States," National Tax Journal, National Tax Association;National Tax Journal, vol. 48(3), pages 329-336, September.
    4. Peter Calcagno & Edward Lopez, 2012. "Divided we vote," Public Choice, Springer, vol. 151(3), pages 517-536, June.
    5. Niklas Potrafke, 2018. "Government ideology and economic policy-making in the United States—a survey," Public Choice, Springer, vol. 174(1), pages 145-207, January.
    6. Christian Bjørnskov & Niklas Potrafke, 2013. "The size and scope of government in the US states: does party ideology matter?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 20(4), pages 687-714, August.
    7. Lopez, Edward J, 2003. "Term Limits: Causes and Consequences," Public Choice, Springer, vol. 114(1-2), pages 1-56, January.
    8. Poterba, James M., 1995. "Balanced Budget Rules and Fiscal Policy: Evidence From the States," National Tax Journal, National Tax Association, vol. 48(3), pages 329-36, September.
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    10. Alt, James E. & Lowry, Robert C., 1994. "Divided Government, Fiscal Institutions, and Budget Deficits: Evidence from the States," American Political Science Review, Cambridge University Press, vol. 88(4), pages 811-828, December.
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    12. James Rogers, 2005. "The Impact of Divided Government on Legislative Production," Public Choice, Springer, vol. 123(1), pages 217-233, April.
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    More about this item

    Keywords

    Economic Freedom; State Fiscal Policy; Formal Constraints; Informal Constraints; Budget Constraints;
    All these keywords.

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • P4 - Political Economy and Comparative Economic Systems - - Other Economic Systems

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