Health politics? Determinants of US states’ reactions to COVID-19

View author details View Less
  • 1 University of Lille, France and CIRANO, , Canada
  • | 2 University of Lille, , France
  • | 3 University of Lille, France, Polytechnique Montréal and CIRANO, , Canada
Restricted access
Get eTOC alerts
Rights and permissions Cite this article

Were policy responses of the US states to the pandemic driven by partisan politics or by budgetary reasons? We show that balanced-budget rules also had an impact, mediated by the possibility of benefiting from the funds previously stored in budget stabilisation funds. State policymakers tried to square the circle by simultaneously respecting budget rules, limiting the economic impact of the social distancing measures, combating the pandemic and pandering to their political bases. Some fiscal rules have induced a trade-off between health and public finance, which may reignite the debate on the pro-cyclicality of fiscal rules.

  • ACIR (Advisory Commission on Intergovernmental Relations) (1987) Fiscal discipline in the federal system: national reform and the experience of the states, Report No. A-107.

    • Search Google Scholar
    • Export Citation
  • Adolph, Ch., Amano, K., Bang-Jensen, B., Fullman, N. and Wilkerson, J. (2020) Pandemic politics: timing state-level social distancing responses to COVID-19, https://doi.org/10.1101/2020.03.30.20046326.

    • Search Google Scholar
    • Export Citation
  • Allcott, H., Boxell, L., Conway, J.C., Gentzkow, M., Thaler, M. and Yang, D.Y. (2020) Polarization and public health: partisan differences in social distancing during the coronavirus pandemic, NBER Working Paper, No. 26946.

    • Search Google Scholar
    • Export Citation
  • Alvarez, F.E., Argente, D. and Lippi, F. (2020) A simple planning problem for COVID-19 lockdown, NBER Working Paper, No. 26981.

  • Angeletos, G.M., Collard, F. and Dellas, H. (2016) Public debt as private liquidity: optimal policy, NBER Working Paper, No. 22794.

  • Asatryan, Z., Castellón, C. and Stratmann, T. (2018) Balanced budget rules and fiscal outcomes: evidence from historical constitutions, Journal of Public Economics, 167 (November):  10519.

    • Search Google Scholar
    • Export Citation
  • Askitas, N., Tatsiramos, K. and Verheyden, B. (2020) Lockdown strategies, mobility patterns and COVID-19, CesIfo Working Paper, No. 8338.

    • Search Google Scholar
    • Export Citation
  • Aum, S., Lee, S.Y.T. and Shin, Y. (2020) COVID-19 doesn’t need lockdowns to destroy jobs: the effect of local outbreaks in Korea, NBER Working Paper, No. 27264.

    • Search Google Scholar
    • Export Citation
  • Azzimonti, M., Battaglini, M. and Coate, S. (2016) The costs and benefits of balanced budget rules: lessons from a political economy model of fiscal policy, Journal of Public Economics, 136 (April):  4561.

    • Search Google Scholar
    • Export Citation
  • Baccini, L. and Brodeur, A. (2020) Explaining governors’ response to the Covid-19 pandemic in the United States, IZA Discussion Paper, No. 13137.

    • Search Google Scholar
    • Export Citation
  • Baldassari, D. and Park, B. (2020) Was there a culture war? Partisan polarization and secular trends in US public opinion, Journal of Politics, 82(3): 80927.

    • Search Google Scholar
    • Export Citation
  • Ball, L., Elmendorf, D.W. and Mankiw, N.G. (1998) The deficit gamble, Journal of Money, Credit and Banking, 30(4): 699720.

  • Barnett, M., Buchak, G. and Yannelis, C. (2020) Epidemic responses under uncertainty, NBER Working Paper, No. 27289.

  • Barrios, J. and Hochberg, Y.V. (2020) Risk perception through the lens of politics in the time of the COVID-19 pandemic, NBER Working Paper, No. 27008.

    • Search Google Scholar
    • Export Citation
  • Barro, R.J. (1979) On the determination of the public debt, Journal of Political Economy, 87(5): 94071.

  • Barro, R.J., Ursúa, J.F. and Weng, J. (2020) The coronavirus and the great influenza pandemic. Lessons from the ‘Spanish Flu’ for the coronavirus’s potential effects on mortality and economic activity, NBER Working Paper, No. 26866.

    • Search Google Scholar
    • Export Citation
  • Battaglini, M. and Coate, S. (2008) A dynamic theory of public spending, taxation, and debt, American Economic Review, 98(1): 20136.

  • Bohn, H. and Inman, R.P. (1996) Balanced-budget rules and public deficits: evidence from the U.S. states, Carnegie-Rochester Conference Series on Public Policy, 45(1): 1376.

    • Search Google Scholar
    • Export Citation
  • Brotherhood, L., Kircher, P., Santos, C. and Tertilt, M. (2020) An economic model of the Covid-19 epidemic: the importance of testing and age-specific policies, CesIfo Working Paper, No. 8316.

    • Search Google Scholar
    • Export Citation
  • Campbell, A.L. and Sances, M.W. (2013) State fiscal policy during the Great Recession: budgetary impacts and policy responses, The Annals of the American Academy of Political and Social Science, 650 (November):  25273.

    • Search Google Scholar
    • Export Citation
  • Cepaluni, G., Dorsch, M.T. and Branyiczki, R. (2020) Political regimes and deaths in the early stages of the COVID-19 pandemic, Cambridge Open Engage, doi: 10.33774/coe-2020-hvvns.

    • Search Google Scholar
    • Export Citation
  • Chetty, R., Friedman, J.N., Hendren, N. and Stepner, M. (The Opportunity Insights Team) (2020) How did Covid-19 and stabilization policies affect spending and employment?, A New Real-time Economic Tracker Based On Private Sector Data, NBER Working Paper, No. 27431.

    • Search Google Scholar
    • Export Citation
  • Clemens, J. and Miran, S. (2012) Fiscal policy multipliers on subnational government spending, American Economic Journal: Economic Policy, 4(2): 4668.

    • Search Google Scholar
    • Export Citation
  • Clemens, J. and Veuger, S. (forthcoming) Implications of the Covid-19 pandemic for state government tax revenues, National Tax Journal, 73(3): 61944. doi: 10.17310/ntj.2020.3.01.

    • Search Google Scholar
    • Export Citation
  • Collard, F., Hellwig, C., Assenza, T., Kankanamge, S., Dupaigne, M., Werquin, N. and Fève, P. (2020) The hammer and the dance: equilibrium and optimal policy during a pandemic crisis, CEPR Discussion Paper, No. 14731 (v. 2).

    • Search Google Scholar
    • Export Citation
  • Couch, K.A., Fairlie, R.W. and Xu, H. (2020) The impacts of Covid-19 on minority unemployment: first evidence from April 2020 CPS microdata, CesIfo Working Paper, No. 8327.

    • Search Google Scholar
    • Export Citation
  • Cronert, A. (2020) Democracy, state capacity, and COVID-19 related school closures, APSA Preprints, https://preprints.apsanet.org/engage/apsa/article-details/5ea8501b68bfcc00122e96ac, doi: 10.33774/apsa-2020-jf671-v4.

    • Search Google Scholar
    • Export Citation
  • Dave, D.M., Friedson, A.I., Matsuzawa, K., McNichols, D. and Sabia, J.J. (2020a) Did the Wisconsin Supreme Court restart a Covid-19 epidemic? Evidence from a natural experiment, NBER Working Paper, No. 27322.

    • Search Google Scholar
    • Export Citation
  • Dave, D.M., Friedson, A.I., Matsuzawa, K. and Sabia, J.J. (2020b) When do shelter-in-place orders fight COVID-19 best? Policy heterogeneity across states and adoption time, NBER Working Paper, No. 27091.

    • Search Google Scholar
    • Export Citation
  • Desmet, K. and Warzciag, R. (2020) Understanding spatial variation in Covid-19 across the United States, NBER Working Paper, No. 27329.

  • Eichenbaum, M.S., Rebelo, S. and Trabandt, M. (2020) The macroeconomics of epidemics, NBER Working Paper, No. 26882.

  • Eichenberger, R., Hegselmann, R., Savage, D.A., Stadelmann, D. and Torgler, B. (forthcoming) Certified coronavirus immunity as a resource and strategy to cope with pandemic costs, Kyklos, doi: 10.1111/kykl.12227.

    • Search Google Scholar
    • Export Citation
  • Fairlie, R.W. (2020) The impact of Covid-19 on small business owners: evidence of early-stage losses from the April 2020 current population survey, NBER Working Paper, No. 27309.

    • Search Google Scholar
    • Export Citation
  • Fan, Y., Orhun, A.Y. and Turjeman, D. (2020) Heterogeneous actions, beliefs, constraints and risk tolerance during the COVID-19 pandemic, NBER Working Paper, No. 27211.

    • Search Google Scholar
    • Export Citation
  • Fernández, J.G. and Parro, F. (2019) Fiscal rules and financial systems: complements or substitutes?, Oxford Bulletin of Economics and Statistics, 81(3): 588616.

    • Search Google Scholar
    • Export Citation
  • Friedson, A.I., McNichols, D., Sabia, J.J. and Dave, D. (2020) Did California’s shelter-in-place order work? Early coronavirus-related public health effects, NBER Working Paper, No. 26992.

    • Search Google Scholar
    • Export Citation
  • Fullman, N., Bang-Jensen, B., Amano, K., Adolph, Ch. and Wilkerson, J. (2020) State-level social distancing policies in response to COVID-19 in the US, www.covid19statepolicy.org/.

    • Search Google Scholar
    • Export Citation
  • Gitmez, A., Sonin, K. and Wright, A.L. (2020) Political economy of crisis response, CEPR Discussion Paper, No. 14778 (v. 3).

  • Glogowski, U., Hansen, E. and Schächtele, S. (2020) How effective are social distancing policies? Evidence on the fight against COVID-19 from Germany, CesIfo Working Paper, No. 8361.

    • Search Google Scholar
    • Export Citation
  • Gonzales-Eiras, M. and Niepelt, D. (2020) On the optimal ‘lockdown’ during an epidemic, CEPR Discussion Paper, No. 14612.

  • Guerrieri, V., Lorenzoni, G., Straub, L. and Werning, I. (2020) Macroeconomic implications of COVID-19: can negative supply shocks cause demand shortages?, NBER Working Paper, No. 26918.

    • Search Google Scholar
    • Export Citation
  • Gupta, S., Nguyen, T.D., Rojas, F.L., Raman, S., Lee, B., Bento, A., Simon, K.I. and Wing, C. (2020) Tracking public and private responses to the COVID-19 epidemic: evidence from state and local government actions, NBER Working Paper, No. 27027.

    • Search Google Scholar
    • Export Citation
  • Hall, R.E., Jones, C.I. and Klenow, P.J. (2020) Trading-off consumption and Covid-19 deaths, NBER Working Paper, No. 27340.

  • Hansen, D. (2020) The effectiveness of fiscal institutions: International financial flogging or domestic constraint?, European Journal of Political Economy, Apr 18: 101879.

    • Search Google Scholar
    • Export Citation
  • Heinemann, F., Moessinger, M.D. and Yeter, M. (2018) Do fiscal rules constrain fiscal policy? A meta-regression-analysis, European Journal of Political Economy, 51(January): 6992.

    • Search Google Scholar
    • Export Citation
  • Hibbs, D.A.J. (1977) Political parties and macroeconomic policy, American Political Science Review, 71:  146787.

  • Hou, Y. and Smith, D. (2006) A framework for understanding state balanced budget requirement systems: re-examining distinctive features and an operational definition, Public Budgeting and Finance, 26(3): 2245.

    • Search Google Scholar
    • Export Citation
  • Hou, Y. and Smith, D.L. (2010) Do state balanced budget requirements matter? Testing two explanatory frameworks, Public Choice, 145(1/2): 5779.

    • Search Google Scholar
    • Export Citation
  • Hutchinson, M.K. and Holtman, M.C. (2005) Analysis of count data using Poisson regression, Research in Nursing & Health, 28(5): 40818.

    • Search Google Scholar
    • Export Citation
  • Ichino, A., Favero, C.A. and Rustichini, A. (2020) Restarting the economy while saving lives under COVID-19, CEPR Discussion Paper, No. 14664 (v. 2).

    • Search Google Scholar
    • Export Citation
  • Jarosch, G., Farboodi, M. and Shimer, R. (2020) Internal and external effects of social distancing in a pandemic, CEPR Discussion Paper, No. 14670.

    • Search Google Scholar
    • Export Citation
  • Jinjarak, Y., Ahmed, R., Nair-Desai, S., Xin, W. and Aizenman, J. (2020) Accounting for global COVID-19 diffusion patterns, January–April 2020, NBER Working Paper, No. 27185.

    • Search Google Scholar
    • Export Citation
  • Jonas, J. (2012) Great Recession and fiscal squeeze at U.S. subnational government level, IMF Working Papers, No. 12/184.

  • Kempf, H. (2020) One foe, so many fights. Making sense of Covid-19 policies,  CesIfo Working Paper, No. 8325.

  • Lee, S.Y., Aum, S. and Shin, Y. (2020) Inequality of fear and self-quarantine: is there a trade-off between GDP and public health?, CEPR Discussion Paper, No. 14679 (v. 9).

    • Search Google Scholar
    • Export Citation
  • Lin, Z. and Meissner, C.M. (2020) Health vs. wealth? Public health policies and the economy during Covid-19, NBER Working Paper, No. 27099.

    • Search Google Scholar
    • Export Citation
  • Mitman, K. and Rabinovich, S. (2020) Optimal unemployment benefits in the pandemic, CEPR Discussion Paper, No. 14915.

  • Mongey, S., Pilossoph, L. and Weinberg, A. (2020) Which workers bear the burden of social distancing policies?, NBER Working Paper, No. 27085.

    • Search Google Scholar
    • Export Citation
  • Nordhaus, W.D. (1975) The political business cycle, Review of Economic Studies, 42(2): 16990.

  • Pew Charitable Trusts (2014) Building state rainy day funds, report, the PEW Charitable Trusts, www.pewtrusts.org/-/media/assets/2014/07/sfh_rainy-day-fund-deposit-rules-report_artready_v9.pdf.

    • Search Google Scholar
    • Export Citation
  • Pew Charitable Trusts (2017) When to use state rainy day funds, report, the PEW Charitable Trusts, http://pew.org/2o7fCls.

  • Piguillem, F. and Shi, L. (2020) Optimal Covid-19 quarantine and testing policies, CEPR Discussion Paper, No. 14613 (v. 2).

  • Poterba, J.M. (1994) State responses to fiscal crises: the effects of budgetary institutions and politics, Journal of Political Economy, 102(4): 799821.

    • Search Google Scholar
    • Export Citation
  • Randall, M. and Rueben, K. (2017) Sustainable Budgeting in the States: Evidence on State Budget Institutions and Practices,  Urban Institute, www.urban.org.

    • Search Google Scholar
    • Export Citation
  • Rogoff, K. (1990) Equilibrium political budget cycles, American Economic Review, 80(1): 2136.

  • Rogoff, K. and Sibert, A. (1988) Elections and macroeconomic policy cycles, Review of Economic Studies, 55(1): 116.

  • Sauvagnat, J., Barrot, J.N. and Grssi, B. (2020) Estimating the costs and benefits of mandated business closures in a pandemic, CEPR Discussion Paper, No. 14757.

    • Search Google Scholar
    • Export Citation
  • Velasco, A. and Chang, R. (2020) Economic policy incentives to preserve lives and livelihoods, CEPR Discussion Paper, No. 14614.

  • Wright, A.L., Sonin, K., Driscoll, J. and Wilson, J. (2020) Poverty and economic dislocation reduce compliance with COVID-19 shelter-in-place protocols, CEPR Discussion Paper, No. 14618 (v. 3).

    • Search Google Scholar
    • Export Citation
  • Yörük, B.K. (2020) Early effects of the Covid-10 pandemic on housing market in the United States, CesIfo Working Paper, No. 8333.

  • Zhao, B. (2016) Saving for a rainy day: estimating the needed size of U.S. state budget stabilization funds, Regional Science and Urban Economics, 61 (November): 13052.

    • Search Google Scholar
    • Export Citation
  • 1 University of Lille, France and CIRANO, , Canada
  • | 2 University of Lille, , France
  • | 3 University of Lille, France, Polytechnique Montréal and CIRANO, , Canada

Content Metrics

May 2022 onwards Past Year Past 30 Days
Abstract Views 0 0 0
Full Text Views 3 3 3
PDF Downloads 3 3 3

Altmetrics

Dimensions