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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
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2020/Volume40/EB-20-V40-I1-P67.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. Peter Calcagno & Edward Lopez, 2012. "Divided we vote," Public Choice, Springer, vol. 151(3), pages 517-536, June.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. 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.
    8. Lopez, Edward J, 2003. "Term Limits: Causes and Consequences," Public Choice, Springer, vol. 114(1-2), pages 1-56, January.
    9. 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.
    10. Monica P. Escaleras & Peter T. Calcagno, 2009. "Does the Gubernatorial Term Limit Type Affect State Government Expenditures?," Public Finance Review, , vol. 37(5), pages 572-595, September.
    11. Robert A. Lawson & Ryan Murphy & Benjamin Powell, 2020. "The Determinants Of Economic Freedom: A Survey," Contemporary Economic Policy, Western Economic Association International, vol. 38(4), pages 622-642, October.
    12. James Rogers, 2005. "The Impact of Divided Government on Legislative Production," Public Choice, Springer, vol. 123(1), pages 217-233, April.
    Full references (including those not matched with items on IDEAS)

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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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