Bargaining Over a New Welfare State
Massachusetts Institute of Technology (MIT) - Sloan School of Management
Maastricht University - Department of Economics; Research Institute of Industrial Economics (IFN)
October 16, 2007
MIT Sloan Research Paper No. 4839-10
IFN Working Paper No. 713
The goal of this paper is twofold: First, to develop an estimable model of legislative politics in the US Congress, second, to provide a greater understanding of the objectives behind the New Deal. In the theoretical model, the distribution of federal funds across regions of the country is the outcome of bargaining game in which the President acts as the agenda-setter and Congress bargains over the final shape of the spending bill. For any given preferences (of the President) and distribution of seats in Congress, the model delivers a unique predicted allocation. Combined with data on New Deal programs, this is used to estimate the objectives of the Roosevelt administration. The results indicate that economic concerns for relief and recovery, though not necessarily for fundamental reform and development, largely drove New Deal spending. Political concerns also mattered, but more on the margin.
Number of Pages in PDF File: 38
Keywords: Political Economy, LegislativeBargaining, New Deal, US Congress, Public Spending
JEL Classification: C78, D72, H11, H50, N42, P48working papers series
Date posted: September 15, 2010
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