A Dynamic Model of State Budget Outcomes under Divided Partisan Government

Alt, James E.; Lowry, Robert C.

doi:10.1111/0022-3816.00045

Cited by 167 publications

(125 citation statements)

References 33 publications

(52 reference statements)

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“…Like Besley andCase (1995a, 2003), we control for variables that might be expected to affect economic policy outcomes, namely: population, per capita state income, and the proportions of elderly (65+) and school-aged (5-17) in the population. In addition, we follow Alt and Lowry (2000) and Besley (2006) in controlling for the party composition of government, including dummies for Democratic Governor, Democratic House, Democratic Senate, and divided government, as well as a folded index of legislative party competition (i.e. the absolute value of deviations from 50% Democratic control) in each chamber.…”

Section: Independent Variables and Controlsmentioning

confidence: 99%

Disentangling Accountability and Competence in Elections: Evidence from U.S. Term Limits

Alt

Mesquita²,

Rose³

2011

The Journal of Politics

193

127

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We exploit variation in U.S. gubernatorial term limits across states and time to empirically estimate two separate effects of elections on government performance. Holding tenure in office constant, differences in performance by reelectioneligible and term-limited incumbents identify an accountability effect: reelection-eligible governors have greater incentives to exert costly effort on behalf of voters. Holding term-limit status constant, differences in performance by incumbents in different terms identify a competence effect: later-term incumbents are more likely to be competent both because they have survived reelection and because they have experience in office. We show that economic growth is higher and taxes, spending, and borrowing costs are lower under reelection-eligible incumbents than under term-limited incumbents (accountability), and under reelected incumbents than under first-term incumbents (competence), all else equal. In addition to improving our understanding of the role of elections in representative democracy, these findings resolve an empirical puzzle about the disappearance of the effect of term limits on gubernatorial performance over time.E lections play two potential roles in representative democracy. First, elections may mitigate moral hazard by creating accountability; that is, politicians may take costly actions on behalf of voters because they know that they will only be reelected if their performance exceeds some standard (e.g., Barro 1973;Ferejohn 1986). Second, elections may mitigate adverse selection by allowing voters to select competent types who perform better, in expectation, than an unknown challenger. Moreover, in the absence of term limits, elections allow voters to retain incumbents whose competence has increased through experience (Padro i Miquel and Snyder 2006). Thus, over time elections may help voters weed out bad types and retain good types (e.g., Ashworth 2005; Ashworth and Bueno de Mesquita 2008;Fearon 1999;Gordon, Huber, and Landa 2007;Gowrisankaran, Mitchell, and Moro 2008;Zaller 1998). 1 Empirically distinguishing the accountability and competence effects of elections has proven difficult. While Fearon (1999) emphasizes a trade-off between accountability and competence (or selecting good types), in many theoretical models, both effects operate in the same direction (Ashworth 2005;Ashworth and Bueno de Mesquita 2006;Banks and Sundaram 1998;Besley 2006;Duggan 2000). Voters' threat to reelect only incumbents believed to be good types gives politicians an incentive to exert effort in order to try to convince voters that they are ''good'' (that is, more competent than they really are). For this reason, behavior by voters that alleviates adverse selection simultaneously alleviates moral hazard.We devise an empirical strategy to isolate the two effects by exploiting variation in the length of gubernatorial term limits. The basic argument is as follows. The relative performance of incumbents in the same term, some of whom are eligible to run again and some of whom a...

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Section: Independent Variables and Controlsmentioning

confidence: 99%

Disentangling Accountability and Competence in Elections: Evidence from U.S. Term Limits

Alt

Mesquita²,

Rose³

2011

The Journal of Politics

193

127

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“…At the state level, Alt and Lowry (1994) find that Democrats tax and spend more, and divided governments are less able to react to revenue shocks. Additionally, Alt and Lowry (2000) explain how a governor's budget proposal may be a dummy taking the value of 1 if the elected governor belongs to the Democratic Party and/or interactions with the polarization measures explained above were included. Also, 36 states currently have a limit on how long governors can serve, since term limits have been receiving considerable attention in the literature as a potential way to limit government and encourage fiscal responsibility (Basham (2001) and New (2001)) a dummy variable that takes the value of one every year after a term limit is adopted is also included.…”

mentioning

confidence: 99%

The Determinants of the Structure of Rainy Day Funds

Rodríguez-Tejedo

2012

Public Administration Review

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This paper investigates the factors that determine the configuration of rainy day funds along their two most important dimensions, deposit and withdrawal requirements. Most states in the United States have created budget stabilization funds (or rainy day funds) to accumulate savings that would allow them to reduce the impact of adverse fiscal conditions. However, it has been shown that the effectiveness of these funds greatly depends on their institutional structure and that most states choose configurations that compromise the efficacy of the fund. Using multinomial discrete techniques, and introducing for the first time the ordered nature of the requirements in the analysis, our results indicate that political and institutional factors, like political fragmentation and some strict fiscal institutions are associated with weak (less effective) budget stabilization funds, while some economic factors -such as the volatility of state tax revenues-are associated with stricter funds.I would like to thank

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“…Alesina and Rosenthal, 1995;Alt and Lowry, 2000;Bartels, 2003;Leigh, 2005). Yet because elections are relatively rare events, one quickly runs out of degrees of freedom, particularly when controlling for other factors.…”

mentioning

confidence: 99%

Economic Voting and Electoral Behavior: How Do Individual, Local, and National Factors Affect the Partisan Choice?

Leigh

2005

Economics & Politics

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What impact do income and other demographic factors have on a voter's partisan choice? Using post‐election surveys of 14,000 voters in 10 Australian elections between 1966 and 2001, I explore the impact that individual, local, and national factors have on voters' decisions. In these 10 elections, the poor, foreign‐born, younger voters, voters born since 1950, men, and those who are unmarried are more likely to be left‐wing. Over the past 35 years, the partisan gap between men and women has closed, but the partisan gap has widened on three dimensions: between young and old; between rich and poor; and between native‐born and foreign‐born. At a neighborhood level, I find that, controlling for a respondent's own characteristics, and instrumenting for neighborhood characteristics, voters who live in richer neighborhoods are more likely to be right‐wing, while those in more ethnically diverse or unequal neighborhoods are more likely to be left‐wing. Controlling for incumbency, macroeconomic factors do not seem to affect partisan preferences – Australian voters apparently regard both major parties as equally capable of governing in booms and busts.

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A Dynamic Model of State Budget Outcomes under Divided Partisan Government

Cited by 167 publications

References 33 publications

Disentangling Accountability and Competence in Elections: Evidence from U.S. Term Limits

Disentangling Accountability and Competence in Elections: Evidence from U.S. Term Limits

The Determinants of the Structure of Rainy Day Funds

Economic Voting and Electoral Behavior: How Do Individual, Local, and National Factors Affect the Partisan Choice?

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