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Party Alternation, Divided Government, and Fiscal Performance within U.S. States

Peter Calcagno () and Monica Escaleras ()

No 6006, Working Papers from Department of Economics, College of Business, Florida Atlantic University

Abstract: The literature on U.S. state government fiscal performance has examined the role of institutional factors such as budget rules and divided government, but has largely ignored the impact of party alternation. This paper primarily focuses on whether party alternation in the governor’s office affects fiscal performance. Our hypothesis is that frequent party changes create a political environment that impacts fiscal performance. To further assess the impact of party alternation on fiscal performance, we consider our primary hypothesis in conjunction with the degree of division that exists between the governor’s office and the legislature. Using panel data from 37 states between 1971 and 2000 we test the hypothesis that frequent party alternation can be expected to affect fiscal performance and find strong support for the hypothesis.

Keywords: Fiscal performance; state government; party alternation (search for similar items in EconPapers)
JEL-codes: D72 H72 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2006-01, Revised 2006-12
New Economics Papers: this item is included in nep-pbe and nep-pol
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Forthcoming in Economics of Governance

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http://www.springerlink.com/content/bx333020027qlq47/ Published version, 2007 (application/pdf)
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