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Noel D Campbell, EFIRM, University of Central Arkansas, 201 Donaghey Avenue, Conway, Arkansas 72035, USA; [email protected]; corresponding author
R Zachary Finney, Marketing Department, Mitchell College of Business, University of South Alabama, Room 360, 307 University Boulevard, Mobile, Alabama 36688-0002, USA; [email protected]
David T Mitchell, Economics and Finance Department, Mitchell College of Business, University of South Alabama, 307 University Boulevard, Mobile, Alabama 36688-0002, USA; [email protected]
[Acknowledgment]
We wish to thank the editor, Laura Razzolini, the anonymous referees, and session participants at the 2006 Annual Meetings of the SEA. We are responsible for any remaining errors.
1. Introduction
In his paper "Has Leviathan Been Bound?" Bryan Caplan (2001) presents a model of a government that expands further or faster than its citizens desire, or a Leviathan government (Brennan and Buchanan 1980). Caplan allows that a conservative party's ideology may serve to partially constrain government growth. A Leviathan government is one that seeks to expand its own power because acquisition of more power is inherently appealing to governments. Caplan uses expenditures or revenues as proxies for power. Using cross-sectional time-series data from the United States, he presents evidence that state governments are "Leviathans," partially but incompletely constrained by ideology. That is, ideological positions that political parties find difficult to abandon serve to limit the government's urge to expand its power. Using the same data, he compares his model to ideological models of government and to unconstrained Leviathan models of government. In ideological models, political parties exist to further a particular set of beliefs or policy positions. In a model with an unconstrained Leviathan, political parties would adopt or abandon any set of policies or core values in order to expand their power. Caplan's evidence indicates that his partially constrained Leviathan model fits the data best.
In support of his Leviathan hypothesis, Caplan's key prediction is that spending and revenue collection will decline as state legislatures become more competitive. Stated otherwise, as one party increases its control over state government, thereby facing less and less effective political competition, government expenditures and revenue collection will rise, ceteris paribus . Caplan's data support this conclusion. He also finds that, as they consolidate political power, Republicans increase spending and tax collection by less than do Democrats. Caplan interprets this as...