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Party alternation, divided government, and fiscal performance within US States

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  • Peter Calcagno

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  • Monica Escaleras

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Abstract

The literature on U.S. state government fiscal performance has examined the role of institutional factors such as budget rules and divided government, but has largely ignored the impact of party alternation. This paper primarily focuses on whether party alternation in the governor’s office affects fiscal performance. Our hypothesis is that frequent party changes create a political environment that impacts fiscal performance. To further assess the impact of party alternation on fiscal performance, we consider our primary hypothesis in conjunction with the degree of division that exists between the governor’s office and the legislature. Using panel data from 37 states between 1971 and 2000 we test the hypothesis that frequent party alternation can be expected to affect fiscal performance and find strong support for the hypothesis.
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Suggested Citation

  • Peter Calcagno & Monica Escaleras, 2007. "Party alternation, divided government, and fiscal performance within US States," Economics of Governance, Springer, vol. 8(2), pages 111-128, February.
  • Handle: RePEc:spr:ecogov:v:8:y:2007:i:2:p:111-128 DOI: 10.1007/s10101-006-0030-z
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    References listed on IDEAS

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    2. Razzolini, Laura & Shughart, William F, II, 1997. "On the (Relative) Unimportance of a Balanced Budget," Public Choice, Springer, vol. 90(1-4), pages 215-233, March.
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    Citations

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    Cited by:

    1. Fabiana Rocha & Veronica Orellano, Karina Bugarin, 2016. "Local public finances in Brazil: are mayoral characteristics important?," Working Papers, Department of Economics 2016_04, University of São Paulo (FEA-USP).
    2. Niklas Potrafke, 2011. "Does government ideology influence budget composition? Empirical evidence from OECD countries," Economics of Governance, Springer, vol. 12(2), pages 101-134, June.
    3. Niklas Potrafke, 2012. "Political cycles and economic performance in OECD countries: empirical evidence from 1951–2006," Public Choice, Springer, vol. 150(1), pages 155-179, January.
    4. Heiko T. Burret & Lars P. Feld, 2014. "A Note on Budget Rules and Fiscal Federalism," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 12(1), pages 03-11, 04.
    5. Christian Bjørnskov & Niklas Potrafke, 2012. "Political Ideology and Economic Freedom Across Canadian Provinces," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, pages 143-166.
    6. repec:ces:ifodic:v:12:y:2014:i:1:p:19108838 is not listed on IDEAS
    7. Niklas Potrafke, 2010. "Ideology and cultural policy," TWI Research Paper Series 49, Thurgauer Wirtschaftsinstitut, Universit�t Konstanz.
    8. Niklas Potrafke, 2017. "Government Ideology and Economic Policy-Making in the United States," CESifo Working Paper Series 6444, CESifo Group Munich.
    9. Hyungon Kim & Chang Kwon, 2015. "The Effects of Fiscal Consolidation and Welfare Composition of Spending on Electoral Outcomes: Evidence from US Gubernatorial Elections between 1978 and 2006," New Political Economy, Taylor & Francis Journals, vol. 20(2), pages 228-253, April.

    More about this item

    Keywords

    Fiscal performance; State government; Party alternation; D72; H72;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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