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

Stratford Douglas () and W. Reed ()

Public Finance Review, 2016, vol. 44, issue 4, 549-558

Abstract: This article replicates and analyzes a study by Hoover and Pecorino (H&P) on federal spending in US states. H&P followed on pathbreaking research by Atlas et al. in which evidence was claimed in favor of the “small state effect†; namely, that since every state is represented by two senators, small states have a disproportionate influence on federal spending 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 ordinary least squares (OLS) standard errors and (ii) include a variable for population growth as suggested in a recent study by Larcinese, Rizzo, and Testa. We conclude that there is insufficient evidence to support the hypothesis of a “small-state effect.â€

Keywords: small-state effect; representation; US senate; replication study (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:44:y:2016:i:4:p:549-558

DOI: 10.1177/1091142114553785

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