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Does Electoral Accountability Affect Economic Policy Choices? Evidence from Gubernatorial Term Limits

  • Timothy Besley
  • Anne Case

This paper uses data from U.S. states to investigate whether electoral accountability affects economic policy choices. We set up a model in which the possibility of being re-elected may curtail opportunistic behavior by incumbent governors. We find that facing a binding term limit affects choices on taxes, expenditures, state minimum wages and mandates on workers' compensation. Such effects are found also to vary with the party affiliation of the incumbent. The Democratic party also appears to suffer at the polls following the term of a lame-duck, Democratic incumbent.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4575.

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Date of creation: Dec 1993
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Publication status: published as Quarterly Journal of Economics, Volme 110, Number 3, August 1995, pp. 769-7 98.
Handle: RePEc:nbr:nberwo:4575
Note: PE
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  1. Alberto Alesina & Nouriel Roubini, 1990. "Political Cycles in OECD Economies," NBER Working Papers 3478, National Bureau of Economic Research, Inc.
  2. Lott, John R, Jr & Davis, Michael L, 1992. " A Critical Review and an Extension of the Political Shirking Literature," Public Choice, Springer, vol. 74(4), pages 461-84, December.
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  5. repec:cup:cbooks:9780521894753 is not listed on IDEAS
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  9. Crain, W Mark & Tollison, Robert D, 1977. "Attenuated Property Rights and the Market for Governors," Journal of Law and Economics, University of Chicago Press, vol. 20(1), pages 205-11, April.
  10. Poterba, James M, 1994. "State Responses to Fiscal Crises: The Effects of Budgetary Institutions and Politics," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 799-821, August.
  11. Besley, Timothy & Case, Anne, 1995. "Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition," American Economic Review, American Economic Association, vol. 85(1), pages 25-45, March.
  12. Barro, Robert J, 1979. "On the Determination of the Public Debt," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 940-71, October.
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  15. Stiglitz, Joseph E & Weiss, Andrew, 1983. "Incentive Effects of Terminations: Applications to the Credit and Labor Markets," American Economic Review, American Economic Association, vol. 73(5), pages 912-27, December.
  16. Shleifer, Andrei & Vishny, Robert W., 1989. "Management entrenchment : The case of manager-specific investments," Journal of Financial Economics, Elsevier, vol. 25(1), pages 123-139, November.
  17. James Adams & Lawrence Kenny, 1989. "The retention of state governors," Public Choice, Springer, vol. 62(1), pages 1-13, July.
  18. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
  19. Peltzman, Sam, 1992. "Voters as Fiscal Conservatives," The Quarterly Journal of Economics, MIT Press, vol. 107(2), pages 327-61, May.
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