The Marble Cake: Introducing Federalism to the Government Growth Equation

Abstract

A great deal of literature has examined the factors that explain government growth in the United States. Analyses have typically been conducted either nationally or by states, but virtually no systematic attention has been given to the role federalism plays in shaping patterns of growth across different orders of government. In this research note, we use Granger causality methods to assess the degree to which government growth is an interactive process across local, state, and national governments. Our findings indicate that state governments are an important force in this process; hence, future models of government growth need to incorporate federalism explicitly.