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A Test Of The Institutionally Induced Equilibrium Hypothesis: On The Limited Fiscal Impact Of Two Celebrity Governors, Roger D. Congleton, Yang Zhou

Economics Faculty Working Papers Series

We test for the stabilizing effects of political institutions on fiscal policies by examining the impact of two unlikely governors on their state’s fiscal policies. Fiscal policies are joint products of executive and legislative decisions. These institutional factors tend to moderate the effect of changes in the chief executive, as does partisan competition for office. Jesse Ventura of Minnesota’s and Arnold Schwarzenegger of California were unique—surprise—governors of their respective states. Although both governors were arguably less constrained by partisan loyalties than most others, the other institutional factors would still tend to limit their impact on public policy. Our evidence suggests …