United States 1976-2000: An Econometric Comparison of Party Control V. State Government Spending

Abstract

Represented here-in is a simple “politiconometric” study: state government spending considered as a function of party control. Leveraging fixed-effect panel regressions and an underlying dataset spanning 1,200 state-year observations, U.S. states are regressed against a variety of party control variable defined at both the state and federal levels; a collection of 48 states analyzed over the years beginning 1976 ending in 2000 are analyzed. Results confirm significant levels of directional causal relationships on certain party control variables and ample insignificant levels of casual effect on other party control variables. Additionally, the research analyzes the degree to which partisan stereotyping regarding spending holds up against the data. Political business cycles are also considered.

Keywords: political business cycle, state government spending, panel regression

JEL Classification: C, H