Recovery and Reinvestment Act Spending at the State Level: Keynesian Stimulus or Distributive Politics?
We examine the US state-level pattern of American Recovery and Reinvestment Act (ARRA) spending. We relate spending to (1) Keynesian determinants of countercyclical policy, (2) congressional power and dominance, and (3) presidential electoral vote importance. We find that the ARRA is, in practice, poorly-designed countercyclical stimulus. After controlling for political variables, coefficients on Keynesian variables are often statistically insignificant. When they are statistically significant they are often the “incorrect” sign. On the other hand, statistically significant effects associated with political variables are almost always of the sign predicted by public choice theory. One striking result is that the elasticity of ARRA spending with respect to the pre-ARRA levels of federal grants and payments to state and local governments is between 0.254 and 0.361. States previously capturing large amounts of federal funds continue to do so under the ARRA stimulus.
|Date of creation:||2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (304) 293-7859
Fax: (304) 293-2233
Web page: http://be.wvu.edu/phd_economics/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Anderson, Gary M & Tollison, Robert D, 1991. "Congressional Influence and Patterns of New Deal Spending, 1933-1939," Journal of Law and Economics, University of Chicago Press, vol. 34(1), pages 161-75, April.
- Bent E. Sørensen & Maria Jose Luengo-Prado, 2005.
"What Can Explain Excess Smoothness and Sensitivity of State-Level Consumption?,"
2005-03, Department of Economics, University of Houston.
- María José Luengo-Prado & Bent E. Sørensen, 2008. "What Can Explain Excess Smoothness and Sensitivity of State-Level Consumption?," The Review of Economics and Statistics, MIT Press, vol. 90(1), pages 65-80, February.
- Thomas A. Garrett & Russell S. Sobel, 2002.
"The political economy of FEMA disaster payments,"
2002-012, Federal Reserve Bank of St. Louis.
- Dennis C. Mueller (ed.), 2001. "The Economics of Politics," Books, Edward Elgar, volume 0, number 2132, April.
- R. Coats & Gökhan Karahan & Robert Tollison, 2006. "Terrorism and pork-barrel spending," Public Choice, Springer, vol. 128(1), pages 275-287, July.
- Holcombe, Randall G & Parker, Glenn R, 1991. " Committees in Legislatures: A Property Rights Perspective," Public Choice, Springer, vol. 70(1), pages 11-20, April.
- White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
- Weingast, Barry R & Marshall, William J, 1988. "The Industrial Organization of Congress; or, Why Legislatures, Like Firms, Are Not Organized as Markets," Journal of Political Economy, University of Chicago Press, vol. 96(1), pages 132-63, February.
- Weingast, Barry R & Moran, Mark J, 1983. "Bureaucratic Discretion or Congressional Control? Regulatory Policymaking by the Federal Trade Commission," Journal of Political Economy, University of Chicago Press, vol. 91(5), pages 765-800, October.
- Lea-Rachel D. Kosnik, 2006. "Sources of Bureaucratic Delay: A Case Study of FERC Dam Relicensing," Journal of Law, Economics and Organization, Oxford University Press, vol. 22(1), pages 258-288, April.
- Reading, Don C., 1973. "New Deal Activity and the States, 1933 to 1939," The Journal of Economic History, Cambridge University Press, vol. 33(04), pages 792-810, December.
- Faith, Roger L & Leavens, Donald R & Tollison, Robert D, 1982. "Antitrust Pork Barrel," Journal of Law and Economics, University of Chicago Press, vol. 25(2), pages 329-42, October.
- Barry Weingast, 1984. "The congressional-bureaucratic system: a principal agent perspective (with applications to the SEC)," Public Choice, Springer, vol. 44(1), pages 147-191, January.
When requesting a correction, please mention this item's handle: RePEc:wvu:wpaper:10-17. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Josh Hall)
If references are entirely missing, you can add them using this form.