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Economics and politics in the United States: a state-level investigation

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  • Chun-Ping Chang
  • Yoonbai Kim
  • Yung-hsiang Ying

Abstract

We examine state income and government spending data to investigate the role of political parties and elections in state business cycles of the United States, and find strong support for the partisan political business cycles, both traditional and rational versions. The growth rate of per capita real income and government spending tend to be higher (lower) with a Democratic (Republican) governor as well as a Democratic (Republican) president. In case of economic growth, we find some evidence for opportunistic cycles induced by national level politics; meanwhile, both national and state governments seem to generate expansionary policy in election years.

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  • Chun-Ping Chang & Yoonbai Kim & Yung-hsiang Ying, 2009. "Economics and politics in the United States: a state-level investigation," Journal of Economic Policy Reform, Taylor and Francis Journals, vol. 12(4), pages 343-354.
  • Handle: RePEc:taf:jecprf:v:12:y:2009:i:4:p:343-354
    DOI: 10.1080/17487870903314633
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    Cited by:

    1. Rickman, Dan S. & Wang, Hongbo, 2018. "Two tales of two U.S. states: Regional fiscal austerity and economic performance," Regional Science and Urban Economics, Elsevier, vol. 68(C), pages 46-55.
    2. repec:kap:pubcho:v:174:y:2018:i:1:d:10.1007_s11127-017-0491-3 is not listed on IDEAS
    3. 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.
    4. Wen, Jun & Hao, Yu & Feng, Gen-Fu & Chang, Chun-Ping, 2016. "Does government ideology influence environmental performance? Evidence based on a new dataset," Economic Systems, Elsevier, vol. 40(2), pages 232-246.
    5. Christian Bjørnskov & Niklas Potrafke, 2012. "Political Ideology and Economic Freedom Across Canadian Provinces," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 38(2), pages 143-166.
    6. Niklas Potrafke, 2017. "Government Ideology and Economic Policy-Making in the United States," CESifo Working Paper Series 6444, CESifo Group Munich.
    7. Niklas Potrafke & Margret Schneider & Christian Simon, 2013. "Zum Einfluss von Parteiideologie auf die Staatstätigkeit in den US-Bundesstaaten," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 66(11), pages 24-29, June.
    8. Bogdan Dima & Stefana Maria Dima & Oana-Ramona Lobont, 2013. "New empirical evidence of the linkages between governance and economic output in the European Union," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 16(1), pages 68-89, March.
    9. Dodge Cahan & Niklas Potrafke, 2017. "The Democratic-Republican Presidential Growth Gap and the Partisan Balance of the State Governments," CESifo Working Paper Series 6517, CESifo Group Munich.

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    Keywords

    political business cycle; state level;

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