Partisanship and Fiscal Policy in Economic Unions: Evidence from US States

• 成果类型: Article
• 署名作者: Carlino, Gerald; Drautzburg, Thorsten; Inman, Robert; Zarra, Nicholas
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Philadelphia; University of Pennsylvania; National Bureau of Economic Research; New York University
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20210147
• 发表日期: 2023
• 页码: 701-737
• 关键词: federal-grants; monetary; stimulus; matter; rules; MODEL

摘要

Partisanship of state governors affects the efficacy of US federal fis-cal policy. Using close election data, we find partisan differences in the marginal propensity to spend federal intergovernmental trans-fers: 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 aggre-gate 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. (JEL D72, E12, E62, H71, H72, H74, H77)