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Government Spending, Shocks, and the Role of Legislature Size: Evidence from the American States *
Author(s) -
Hankins William B.
Publication year - 2015
Publication title -
social science quarterly
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.482
H-Index - 90
eISSN - 1540-6237
pISSN - 0038-4941
DOI - 10.1111/ssqu.12157
Subject(s) - economics , government spending , legislature , per capita , shock (circulatory) , welfare , demographic economics , panel data , government (linguistics) , monetary economics , macroeconomics , public economics , econometrics , political science , population , demography , linguistics , philosophy , law , medicine , sociology , market economy
Objective I examine the relationship between legislature size and several components of government spending using a methodology that allows me to estimate how legislature size influences the fiscal response to shocks that are common to all states. Method I use nonlinear least squares on a panel of 48 of the 50 American states over the period 1978–2008. Results I find little evidence that states with larger than average lower or upper chambers experience a larger change in spending per capita in the presence of a shock. I do find a positive relationship between lower chamber size and the first difference of welfare spending per capita, but this increase is partially offset by a negative relationship between upper chamber size and welfare spending. Conclusion These results are consistent with the interest groups theory of government, which states that larger legislatures can be associated with lobbying and bargaining costs that may have offsetting effects.