John G. MatsusakaJournal of Political Economy

June 1995

Presented by: Aaron Phillips

How does the initiative impact state and local government finances?

To what degree is this impact?

Matsusaka is not concerned with the social or regulatory impacts of the initiative.

OLS Regression First model:

Second model:

Final Equation used for Regression:

Variables for vector :• Dummy for initiative• % signature requirement

Variables for vector :• Income per capita• Population density• Metropolitan population• Population growth rate• Value of mineral production• Measure of “conservativeness” of state’s U.S.

Senators

Governmental Finances – U.S. Bureau of the Census

State and Metropolitan Area Data Book – U.S. Bureau of the Census

Minerals Yearbook – Bureau of Mines Initiative information - Magleby

(1984)

Elected representatives spend more than the median voter wishes.

States with the initiative:• Lower spending per capita (roughly 4%)• Reduction of state general spending, increase

in local.(-12% and +10%)• Reduction in taxes, increase in fees and

charges (-8% and +7%)• Overall reduction in state government

redistribution