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Alt and Lowry: Divided government, fiscal institutions, and budget deficits

Disclaimer. Don't rely on these old notes in lieu of reading the literature, but they can jog your memory. As a grad student long ago, my peers and I collaborated to write and exchange summaries of political science research. I posted them to a wiki-style website. "Wikisum" is now dead but archived here. I cannot vouch for these notes' accuracy, nor can I even say who wrote them. If you have more recent summaries to add to this collection, send them my way I guess. Sorry for the ads; they cover the costs of keeping this online.

Alt and Lowry. 1994. Divided government, fiscal institutions, and budget deficits: Evidence from the states. American Political Science Review 88:811-828.

MAIN POINT

At the state level, three Xs affect fiscal outcomes (i.e. the response to fiscal surplus or deficit): divided government, institutions, and party control.

VARIABLES AND HYPOTHESES

The authors make 8 hypotheses from the three main variables.

X1: Party control. Without parties, a "benevolent dictator" model would predict simply setting taxes to minimize deadweight loss and provide maximal benefits.

X2: Divided government. Can come in 8 combinations. The authors focus mostly on split-legislature and split-branch divisions. (Indicidentally, they claim that focusing on the differences between split-legislature and split-branch divisions can contribute important insights.)

X3: Institutions. Laws that require a balanced budget or that prohibit carrying a deficit over into the next fiscal year make a balanced budget more likely.

DATA

The authors use data from the early 1980s from 48 states.

FINDINGS

  1. Divided party control matters, especially when responding to exogenous shocks. Divided control makes it harder to quickly adjust to exogenous shocks.
  2. Institutional constraints on fiscal policy matter--at least when party control is unified.
  3. There are systematic differences between Republicans and Democrats, though more complex than simply "Democrats spend and tax more."

Research by the same authors

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Tags

Alt, James (author)Lowry, Robert (author)Political ScienceAmerican PoliticsDivided GovernmentAppropriationsLegislative-Executive Bargaining

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