Political Competition and State Government Size: Do Tighter Elections Produce Looser Budgets?
We test implications of political competition theory concerning government size, using data from U.S. states. We find that greater political competition in the race for governor acts as a check against bigger government. Evidence on the effectiveness of legal limits on expenditures and/or revenues growth is mixed. The Democratic Party is associated with bigger government, but only when party representation in both the governor's house and the legislature is strong. The flypaper effect of grants is found to be strong. Our results have implications for models of fiscal illusion. Copyright 2000 by Kluwer Academic Publishers
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