The Relationship Between Divided Government And Real Per Capita Gross State Product

This paper analyzes the relationship between divided government and real per capita gross state product in U.S. states using a panel study of data from all of the contiguous U.S. states, except Nebraska, for the period of 1990 to 2007. Some literature can be found on the relationship between divided government and economic growth at the national level. There is a lack of study of this relationship at the state level. Real per capita gross state product is the dependent variable in this study. Divided government, partisan control of the governor\u27s office, partisan control of the state legislature, combined federal and state government expenditures as a percentage of gross state product, educational attainment levels, and population density are the independent variables. Average yearly temperature and the number of years that members of the highest court were allowed to hold their office were also included as variables in my original model. These variables were dropped when it became apparent that a fixed effects model was necessary for this study. The effect of average yearly temperatures became insignificant once dummies for years and states were introduced in the fixed effects model. The results of this study indicate that there is no relationship between divided government and real per capita GDP. On the other hand the results do indicate that increases in government spending as a percentage of GDP will have an adverse effect on real per capita GDP. These results are tentative since it is possible that my model was incorrectly specified due to my inability to obtain a variable that would measure changes in capital infrastructure over time