Cyclical Pattern of Expenditure Based on the Revenue Structure: Examining the Influence of Political Power in the United States

세입구조에 기초한 지출의 순환패턴: 미국의 정치 성향 영향에 따른 연구를 중심으로

(Purpose) This study examines states’ procyclical spending and how decision makers influence expenditures’ heterogeneously measured spending elasticity. (Design/methodology/approach) In order to examine the elasticity of a specific government spending category with respect to government revenue, I set a panel data using 48 states in the United States from fiscal year 1997 to fiscal year 2016. (Findings) The study yields evidence that state spending is procyclical, and this pattern applies to some functions, such as education and highways. In addition, total spending is more procyclical when a state has a Democratic governor and a form of split government. Educational expenditures are also more procyclical when a state has a Democratic governor. Additionally, highway expenditures are more procyclical when a government is divided, while political ideology of the governor is not statistically significant. (Research implications or originality) States demonstrate procyclical spending behavior, and this behavior tends to strengthen under a Democratic ideology or a split government. This study examines states’ procyclical spending and how decision makers influence expenditures’ heterogeneously measured spending elasticity. In order to examine the elasticity of a specific government spending category with respect to government revenue, we set a panel data using 48 states in the United States from fiscal year 1997 to fiscal year 2016. The study yields evidence that state spending is procyclical, and this pattern applies to some functions, such as education and highways. In addition, total spending is more procyclical when a state has a Democratic governor and a form of split government. Educational expenditures are also more procyclical when a state has a Democratic governor. Additionally, highway expenditures are more procyclical when a government is divided, while political ideology of the governor is not statistically significant. In conclusion, states demonstrate procyclical spending behavior, and this behavior tends to strengthen under a Democratic ideology or a split government.