Conclusions
This study began by trying to explain differences in state branch-banking regulations. Introducing a variable that captures the effect of political dominance over time improves upon the commonly used measures of political dominance at a specific point in time. Even the direct comparison with the previously used percentage point-in-time variables shows that duration of political influence matters significantly. No matter which party is in control, the length of time it has been in control in a state influences political outcomes. We show that, in terms of which kind of legislation will be enacted, Democratic and Republican control exert equal but opposite effects on legislative results. In other words, length of control matters independently of party affiliation, but party affiliation affects the nature of the outcome of the political process.
This new approach might be useful in different areas of the public choice literature. For example, it could be applied to analyzing how abortion laws vary across states. Other areas of economics might benefit as well from considering the duration of control. For example, the political business cycle literature, as in Alesina and Sachs (1988), Golden and Poterba (1980), Hibbs (1977) and Hawthorne and Jackson (1987), that examines patterns in macroeconomic policies and outcomes associated with the kind of government in power, might well be improved by including duration as well as direction of control. In general, any area of public economics in which the effects of political power are considered would benefit from considering the duration as well as the incidence of that power.
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The authors thank Daniel Hamermesh for his helpful comments on an earlier draft. Data and definitions of the variables are available on disk from the authors upon request.
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Klier, T., McPherson, M. Does duration of political control matter? Interstate differences in branch-banking laws. Public Choice 70, 41–50 (1991). https://doi.org/10.1007/BF00239343
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DOI: https://doi.org/10.1007/BF00239343