Pick Your Poison: Do Politicians Regulate When They Can’t Spend?

Noel Johnson (), Matthew Mitchell () and Steven Yamarik ()

MPRA Paper from University Library of Munich, Germany

Abstract: We investigate whether laws restricting fiscal policies across U.S. states lead politicians to adopt more partisan regulatory policy instead. We first show that partisan policy outcomes do exist across U.S. states, with Republicans cutting taxes and spending and Democrats raising them. We then demonstrate that these partisan policy outcomes are moderated in states with no-carry restrictions on public deficits. Lastly, we test whether unified Republican or Democratic state governments regulate more when constrained by no-carry restrictions. We find no-carry laws restrict partisan fiscal outcomes but tend to lead to more partisan regulatory outcomes.

Keywords: Regulation; Taxation; Local Public Finance; U.S. States; Balanced Budget Rules (search for similar items in EconPapers)
JEL-codes: D02 H11 L51 (search for similar items in EconPapers)
Date: 2012-02
New Economics Papers: this item is included in nep-pol and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:37430

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