Partisanship and fiscal policy in economic unions: Evidence from US states
By: Carlino,Gerald et al
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Material type: 
BookPublisher: The American: Economic Reviews Description: 113(3), Mar, 2023: p. 701-737.
In:
The American: Economic ReviewsSummary: Partisanship of state governors affects the efficacy of US federal fiscal policy. Using close election data, we find partisan differences in the marginal propensity to spend federal intergovernmental transfers: Republican governors spend less than Democratic governors. Correspondingly, Republican-led states have lower debt, (delayed) lower taxes, and initially lower economic activity. A New Keynesian model of partisan states in a monetary union implies sizable aggregate effects: The intergovernmental transfer impact multiplier rises by 0.58 if Republican governors spend like Democratic governors, but due to delayed tax cuts, the long-run multiplier is higher with more Republican governors, generating an intertemporal policy trade-off. – Reproduced
| Item type | Current location | Call number | Vol info | URL | Status | Date due | Barcode |
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Articles
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Indian Institute of Public Administration | 113(3), Mar, 2023: p. 701-737 | https://www.iipa.org.in/cms/public/page/library | Available | AR128625 |
Partisanship of state governors affects the efficacy of US federal fiscal policy. Using close election data, we find partisan differences in the marginal propensity to spend federal intergovernmental transfers: Republican governors spend less than Democratic governors. Correspondingly, Republican-led states have lower debt, (delayed) lower taxes, and initially lower economic activity. A New Keynesian model of partisan states in a monetary union implies sizable aggregate effects: The intergovernmental transfer impact multiplier rises by 0.58 if Republican governors spend like Democratic governors, but due to delayed tax cuts, the long-run multiplier is higher with more Republican governors, generating an intertemporal policy trade-off. – Reproduced
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