President Reagan's proposal for a "New Federalism" raises a fundamental challenge to our current structure of Federal-state-local fiscal relations.This research examInes the lIkely consequences of the New Federalism for fiscal allocations by state governments, and attempts to model the impact on...

Partisanship of state level politicians affect the impact of federal fiscal policy in the U.S. Using data from close gubernatorial elections, we find partisan differences in the marginal propensity to spend federal transfers since the early 1980's: Republican governors spend less. A New...

If there was any time to expect a large peace-time multiplier effect from federal spending in the states, it would have been during the period from 1930 through 1940. Interest rates were near the zero bound, and unemployment rates never fell below 10 percent and there was ample idle capacity. We...

The 2007-2010 recession has imposed significant fiscal hardships on state and local governments. The result has been state deficits and the need to increase state taxes, cut spending, and withdraw funds from state rainy day accounts. The primary cause of state budget "gaps" has been the rise in...

There are two main forms of government in U.S. cities: council-manager and mayor-council. This paper develops a theory of fiscal policy determination under these two forms. The theory predicts that expected public spending will be lower under mayor-council, but that either form of government...

The flypaper effect results when a dollar of exogenous grants-in-aid leads to significantly greater public spending than an equivalent dollar of citizen income: Money sticks where it hits. Viewing governments as agents for a representative citizen voter, this empirical result is an anomaly. Four...

During the New Deal the Roosevelt Administration dramatically expanded relief spending to combat extraordinarily high rates of unemployment. We examine the dynamic relationships between relief spending and local private labor markets using a new panel data set of monthly relief, private...

This paper presents a dynamic political economy theory of public spending, taxation and debt. Policy choices are made by a legislature consisting of representatives elected by geographically-defined districts. The legislature can raise revenues via a distortionary income tax and by borrowing....

We examine the importance of Roosevelt's 'relief, recovery, and reform' motives to the distribution of New Deal funds across over 3,000 U.S. counties, program by program. The major relief programs most closely followed Roosevelt's three R's. Other programs were tilted more in favor of areas with...