Peter T. Calcagno

Political Action Committee Spending and Senate roll call voting

This paper addresses how PAC spending affects the roll call voting behavior of U.S. Senators. Using a theoretical framework which draws broadly on the voting literature, we develop models that explain Senatorial voting behavior in a pre-PAC and post-PAC world. Testing both models we find weak support for a Downs-Black view of voting participation in the first model. The second model supports the alteration of voting incentives resulting from PAC spending. We find that PACs have a positive effect on voting participation. The conjecture remains whether PACs change voting outcomes, but it is clear that they buy voting participation.

Corruption and Voter Participation

The literature on voter turnout focuses on the determinants of the electorate’s vote supply. There is growing recognition, however, that the demanders of votes—candidates, political parties, and interest groups—have strong incentives to invest resources in mobilizing support on Election Day. The authors test the hypothesis that corruption rents increase the value of holding public office and, hence, elicit greater demand-side effort in building winning coalitions. Analyzing a pooled time-series data set of public officials convicted of misusing their offices between 1979 and 2005, we find, after controlling for other influential factors, that governmental corruption raises voter turnout rates in gubernatorial elections.

Economic freedom, the cost of public borrowing, and state bond ratings

Purpose – The purpose of this paper is to show that state economic policies, in addition to state economic performance, impact state bond ratings. Design/methodology/approach – Using a sample of 39 states over the period 1998-2008, regression analysis is employed to determine whether various measures of economic freedom contribute to state bond ratings. Findings – After controlling for common factors such as state per-capita income, unemployment, the ratio of tax revenue to income, state debt as a percentage of government revenue, and public corruption, results suggest that greater economic freedom is associated with higher bond ratings. For example, a one standard deviation increase in Area 2 of the Economic Freedom of North America index (Takings and Taxation) would be associated with a 0.36 increase in Moodys bond rating for that state, which translates to approximately a

State Economic Incentives: Stimulus or Reallocation?

247 lower cost per million dollars of debt. Originality/value – This study contributes to the empirical state bond rating literature by highlighting that states with greater economic freedom have higher bond ratings and, therefore, pay lower borrowing costs than their counterparts with lower economic freedom index scores.

Casinos and political corruption in the United States: a Granger causality analysis

This article estimates the effects of state economic incentives during the 1980s and interprets results in the context of a general-equilibrium specific-factors model of production. The issue is whether investment incentives had a net positive impact on manufacturing value added because subsidized firms would pull resources from the rest of the state economy. The public finance literature provides the foundation of the econometric model. Empirical results are consistent with theoretical predictions of the specific-factors model that resources would come from other sectors. Incentives are associated with a reduction in manufacturing value added.

Does the Gubernatorial Term Limit Type Affect State Government Expenditures

The commercial casino industry experienced an unprecedented expansion in the United States during the 1990s. As the industry has grown, so has the anecdotal evidence that links the casino industry with political corruption. However, there have been no empirical analyses of the issue. We use state-level panel data from 1985–2000 to posit a Granger causality analysis of the relationship between corruption convictions of state public officials and the predicted adoptions of casinos at the state level. We find evidence that predicted casino adoptions Granger cause corruption convictions. This finding is suggestive of a scenario of regulatory capture and may help explain why state-level gaming regulatory agencies have a history of softening gaming regulations after the initial introduction of casinos. Our study provides the first empirical evidence linking casinos to political corruption.

HOW EFFECTIVE ARE EXPERT TV HOSTS AT SAVING FAILING BUSINESSES?: Can Expert TV Hosts Save Failing Businesses?

Political institutions within a society often serve to create the rules governing economic actions, to establish norms of economic behavior, and ultimately to help explain the relative economic performance of society. Institutions like budgetary constraints, party ideology, term limits, and voting methods have been analyzed with emphasis on the interplay of politics and economics. Within this field, we believe that the study of term limits is of particular importance. Hence, this article empirically investigates the link between the different types of gubernatorial term limits and state expenditures, after controlling for political institutions. Using panel data from thirty-seven U.S. states between 1971 and 2005, we find that all three types of term limits (weak, moderate, and strong) have a positive impact on gubernatorial spending. However, only weak and moderate term limits are statistically significant, suggesting that the more lenient is the constraint on the governor the greater is the impetus to spend.

DOES FISCAL DECENTRALIZATION AFFECT INFRASTRUCTURE QUALITY? AN EXAMINATION OF U.S. STATES

The profit and loss system is an integral part of a dynamic market economy. Losses eliminate businesses that are inefficiently managed or whose products no longer provide sufficient value. Almost a dozen popular television shows feature entertaining expert hosts claiming to “save” failing businesses with injections of physical and human capital. We undertake the first comprehensive analysis of these shows, calculating the failure rates of the businesses and analyzing the incentive structure facing the shows, networks, hosts, and participants. In general, we find that these shows are largely unsuccessful in saving failing businesses. (JEL L26, L82)

Informal Norms Trump Formal Constraints: The Evolution of Fiscal Policy Institutions in the United States

A transportation network is vital to an economy. However, the U.S. highway infrastructure suffers from insufficient maintenance creating inefficiencies such as increased travel times and increase in accidents. The means to fund the infrastructure and their maintenance is a point of debate. In this paper, we examine the role of political institutions and decision†making on the quality of highway infrastructure by focusing on the role of fiscal decentralization. Using generalized linear model estimation on state data from 1992 to 2012, we find evidence that fiscal decentralization improves infrastructure quality. These results are robust to the choice of control variables and method of estimation. (JEL D73, H42, H72)

Determinants of the probability and timing of commercial casino legalization in the United States

Two shifts of informal rules occurred in the decades around the turn of the 20th century that continue to shape U.S. fiscal policy outcomes. Spending norms in the electorate shifted to expand the scope of the government budget to promote economic security and macroeconomic stability. Simultaneously, norms for elected office shifted to careerism. Both norms were later codified into formal rules as legislation creating entitlement programs, macroeconomic responsibility, and organizational changes to the fiscal policy process. This institutional evolution increased demand for federal expenditures while creating budgetary commons, thus imparting strong motivations to spend through deficit finance in normal times. Despite the last four decades of legislative attempts to constrain spending relative to taxes, the informal norms have trumped the formal constraints. While the empirical literature on deficits has examined the constraining effects of informal rules, this paper offers a novel treatment of shifting norms as having expansionary effects on deficits.