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Pick Your Poison: Do Politicians Regulate When They Can’t Spend?

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  • Johnson, Noel D
  • Matthew, Mitchell
  • Yamarik, Steven

Abstract

We investigate whether laws restricting fiscal policies across U.S. states lead politicians to adopt more partisan regulatory policy instead. We first show that partisan policy outcomes do exist across U.S. states, with Republicans cutting taxes and spending and Democrats raising them. We then demonstrate that these partisan policy outcomes are moderated in states with no-carry restrictions on public deficits. Lastly, we test whether unified Republican or Democratic state governments regulate more when constrained by no-carry restrictions. We find no-carry laws restrict partisan fiscal outcomes but tend to lead to more partisan regulatory outcomes.

Suggested Citation

  • Johnson, Noel D & Matthew, Mitchell & Yamarik, Steven, 2012. "Pick Your Poison: Do Politicians Regulate When They Can’t Spend?," MPRA Paper 37430, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:37430
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    References listed on IDEAS

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    Cited by:

    1. Buchheim, Lukas & Fretz, Stephan, 2020. "Parties, divided government, and infrastructure expenditures: Evidence from U.S. states," European Journal of Political Economy, Elsevier, vol. 61(C).

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    More about this item

    Keywords

    Regulation; Taxation; Local Public Finance; U.S. States; Balanced Budget Rules;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

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