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

Listed author(s):
  • Stratford Douglas

    (West Virginia University, College of Business and Economics)

  • W. Robert Reed

    (University of Canterbury, Department of Economics and Finance)

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."

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File URL: http://be.wvu.edu/phd_economics/pdf/14-03.pdf
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Paper provided by Department of Economics, West Virginia University in its series Working Papers with number 14-03.

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Length: 26 pages
Date of creation: 2014
Handle: RePEc:wvu:wpaper:14-03
Contact details of provider: Postal:
P.O. Box 6025, Morgantown, WV 26506-6025

Phone: (304) 293-7859
Fax: (304) 293-2233
Web page: http://business.wvu.edu/graduate-degrees/phd-economics
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  1. 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.
  2. Alesina, Alberto & Wacziarg, Romain, 1998. "Openness, country size and government," Journal of Public Economics, Elsevier, vol. 69(3), pages 305-321, September.
  3. 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.
  4. 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.
  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.
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