Original Paper

Economics of Governance

, Volume 8, Issue 2, pp 111-128

Party alternation, divided government, and fiscal performance within US States

  • Peter T. CalcagnoAffiliated withDepartment of Economics and Finance, College of Charleston Email author 
  • , Monica EscalerasAffiliated withDepartment of Economics, Florida Atlantic University

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Abstract

The literature on US 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

JEL Classification

D72 H72