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Incremental State Higher Education Expenditures


  • Gary Shelley


  • David Wright


Panel regressions are used to analyze various measures of state higher education expenditures for 45 states over a time period from 1986 through 2005. Results of panel stationarity tests indicate that each expenditures series contains a unit root. This finding is consistent with the incremental theory of public expenditures and implies that time series of these variables should be differenced if used as dependent variables in regression models. Regression results indicate that changes in state higher education expenditures are significantly procyclical. State higher education spending appears to fully adjust to population growth and over-adjust to CPI inflation. Larger state governments are associated with significantly larger annual adjustments to per capita real state higher education expenditures. No significant evidence is found that state Medicaid or elementary education expenditures crowd out higher education spending. Copyright International Atlantic Economic Society 2009

Suggested Citation

  • Gary Shelley & David Wright, 2009. "Incremental State Higher Education Expenditures," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 37(1), pages 87-98, March.
  • Handle: RePEc:kap:atlecj:v:37:y:2009:i:1:p:87-98
    DOI: 10.1007/s11293-008-9161-7

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    More about this item


    State higher education expenditures; Incremental spending; Panel regressions; H75 (State & Local Government: Health; Education; and Welfare); I22 (Educational Finance); C23 (Models with Panel Data);

    JEL classification:

    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models


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