Fiscal Policy, Legislature Size, and Political Parties: Evidence from State and Local Governments in the First Half of the 20th Century

57 National Tax Journal Vol. LIV, No. 1 Abstract This paper tests whether state and local fiscal policy depended on the number of seats in the legislature in the first half of the 20th century. We find that large legislatures spent more, as implied by the “Law of 1/n” from the fiscal commons/logrolling literature. The same relation appears in the latter half of the century, and therefore seems to be systematic. We also find—again consistent with postwar evidence—that only the size of the upper house was important. We are unable to find robust evidence that expenditure depended on the partisan makeup of the legislature.