The role of politics and economics in the allocation of federal stimulus spending

Abstract

This study identifies the political and economic variables that explain differences among US states in per capita funding resulting from the American Recovery and Reinvestment Act (ARRA) of 2009. We find a marginal statistically significant negative relationship between states that have been traditionally Democratic (Blue states) versus those that have traditionally been Republican (Red states). Additionally, we find a highly statistically significant negative relationship between states that were traditionally Republican but voted for President Obama in the 2008 election (Blue states) and traditionally Red states. Furthermore, our findings suggest that there is a statistically significant positive relationship between union representation for a state and per capita funding and between per capita electoral votes and per capita funding. With regard to economic variables, we find that a state's unemployment rate has a positive and statistically significant influence with regard to funding, but a state's poverty rate has no statistically significant impact on funding.

Acknowledgement

The authors wish to thank Mr. Aaron Morris for his help in the development of this paper.