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Procyclical state spending in the USA : the impact of political ideology, public finance and management


Reference:

Abbott, A. and Jones, P., 2012. Procyclical state spending in the USA : the impact of political ideology, public finance and management. Public Finance and Management, 12 (3).

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http://www.spaef.com/article/1383/Procyclical-State-Spending-in-the-USA:-The-Impact-of-Political-Ideology

Abstract

Fiscal policy is procyclical when government expenditures and tax revenues increase during periods of economic growth and decrease during periods of economic slowdown. This paper estimates sub-central government spending and revenue cyclicality in the USA. The panel dataset comprises observations for 51 states from 1963 to 2006. The paper considers why some sub-central governments are more likely to spend procyclically. The first hypothesis is that differences in cyclicality across the states of the USA reflect differences in voters’ political ideologies. The second is that differences in cyclicality reflect differences in political networks. States are more likely to spend procyclically if the state governor is a Democrat. Ideology is relevant but the likelihood of procyclical spending is even higher if there is a coincidence between a Democratic state governor and Democratic president.

Details

Item Type Articles
CreatorsAbbott, A.and Jones, P.
DepartmentsFaculty of Humanities & Social Sciences > Economics
RefereedYes
StatusPublished
ID Code31932
Additional InformationSymposium on Democracy and Public Finance

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