Abstract
We examine state income and government spending data to investigate the role of political parties and elections in state business cycles of the United States, and find strong support for the partisan political business cycles, both traditional and rational versions. The growth rate of per capita real income and government spending tend to be higher (lower) with a Democratic (Republican) governor as well as a Democratic (Republican) president. In case of economic growth, we find some evidence for opportunistic cycles induced by national level politics; meanwhile, both national and state governments seem to generate expansionary policy in election years.
| Original language | English |
|---|---|
| Pages (from-to) | 343-354 |
| Number of pages | 12 |
| Journal | Journal of Economic Policy Reform |
| Volume | 12 |
| Issue number | 4 |
| DOIs | |
| State | Published - 2009 |
Bibliographical note
Funding Information:This paper is based on a chapter of Chun-Ping Chang’s PhD dissertation. Chun-Ping Chang is especially indebted to Professor Yoonbai Kim and Yung-hsiang Ying for their encouragement and advice. We would like to thank the editor, Professor Michael Connolly and anonymous reviewers for comments on the paper. The first author is also grateful to the National Science Council of Taiwan for financial support through grant NSC 97-2410-H-158-003. All remaining errors are our own.
Keywords
- Political business cycle
- State level
ASJC Scopus subject areas
- General Economics, Econometrics and Finance
- Business and International Management
