Does Electoral Accountability Affect Economic Policy Choices? Evidence from Gubernatorial Term Limits

Timothy Besley and Anne Case

The Quarterly Journal of Economics, 1995, vol. 110, issue 3, 769-798

Abstract: This paper analyzes the behavior of U. S. governors from 1950 to 1986 to investigate a reputation-building model of political behavior. We argue that differences in the behavior of governors who face a binding term limit and those who are able to run again provides a source of variation in discount rates that can be used to test a political agency model. We find evidence that taxes, spending, and other policy instruments respond to a binding term limit if a Democrat is in office. The result is a fiscal cycle in term-limit states, which lowers state income when the term limit binds.

Date: 1995
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Working Paper: Does Electoral Accountability Affect Economic Policy Choices? Evidence from Gubernatorial Term Limits (1993)
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