State government expenditure determinants and tax revenue determinants revisited

The primary aim of the research was to test the general hypothesis that man y institutional and political variables affect fiscal outcomes; that the pr eferences of public officials, and the decision processes used to act on th ose preferences, matter. State government data (state only, not state and l ocal) from 1980, 1985, and 1990 were used to specify state tax revenue and expenditure models. A previous (Merrifield, 1991) state tax revenue model i dentified many significant institutional and political variables, but it wa s based only on 1985 data (49 observations). The larger data set (147 obser vations), including better data for some of the variables, indicated that m ost of Merrifield's (1991) findings are robust. The state expenditure model s facilitated a second test of the general institutional and political vari able hypothesis, as well as the hypotheses about specific variables. The ex penditure model also facilitated comparisons of expenditure and tax determi nants, and comparisons with results published in the literature. Though the re are some noteworthy differences between the expenditure and tax models, the expenditure models also supported many of the institutional and politic al variable hypotheses.