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A Replication of "The Political Determinants of Federal Expenditure at the State Level (Public Choice, 2005)

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Abstract

This paper replicates and analyses a study by Hoover and Pecorino (2005) on federal spending in US states. H&P followed on path-breaking research by Atlas et al. (1995) in which evidence was claimed in favour of the “small state effect;” namely, that since every state is represented by two senators, small states have a disproportionate influence relative to their population size. Using H&P’s data, we both replicate their results, and demonstrate strong support for the small state effect when we formally test their predictions. The contribution of this study is that we demonstrate that this empirical support vanishes when we (i) employ cluster robust standard errors rather than conventional OLS standard errors, and (ii) include a variable for population growth as suggested in a recent study by Larcinese et al. (2013). Our results lead us to conclude that there is no evidence to support the hypothesis of a “small state effect.”

Suggested Citation

  • Stratford Douglas & W. Robert Reed, 2013. "A Replication of "The Political Determinants of Federal Expenditure at the State Level (Public Choice, 2005)," Working Papers in Economics 13/31, University of Canterbury, Department of Economics and Finance.
    • Handle: RePEc:cbt:econwp:13/31
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    File URL: https://repec.canterbury.ac.nz/cbt/econwp/1331.pdf
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    1. Lee, Frances E., 2000. "Senate Representation and Coalition Building in Distributive Politics," American Political Science Review, Cambridge University Press, vol. 94(1), pages 59-72, March.
    2. Valentino Larcinese & Leonzio Rizzo & Cecilia Testa, 2013. "Why Do Small States Receive More Federal Money? U.S. Senate Representation and the Allocation of Federal Budget," Economics and Politics, Wiley Blackwell, vol. 25(3), pages 257-282, November.
    3. Valentino Larcinese & Leonzio Rizzo & Cecilia Testa, 2013. "Why Do Small States Receive More Federal Money? U.S. Senate Representation and the Allocation of Federal Budget," Economics and Politics, Wiley Blackwell, vol. 25(3), pages 257-282, November.
    4. Wallis, John Joseph, 1998. "The Political Economy of New Deal Spending Revisited, Again: With and without Nevada," Explorations in Economic History, Elsevier, vol. 35(2), pages 140-170, April.
    5. Gary Hoover & Paul Pecorino, 2005. "The Political Determinants of Federal Expenditure at the State Level," Public Choice, Springer, vol. 123(1), pages 95-113, April.
    6. Alesina, Alberto & Wacziarg, Romain, 1998. "Openness, country size and government," Journal of Public Economics, Elsevier, vol. 69(3), pages 305-321, September.
    7. Atlas, Cary M, et al, 1995. "Slicing the Federal Government Net Spending Pie: Who Wins, Who Loses, and Why," American Economic Review, American Economic Association, vol. 85(3), pages 624-629, June.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Is there a small-state effect?
      by Economic Logician in Economic Logic on 2013-12-30 22:17:00

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    More about this item

    Keywords

    Small state effect; Representation; US Senate; Replication study;
    All these keywords.

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General

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