The political economy of functional federalism :
exploring the effect of federal welfare policy on state economic performance
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[ACCESS RESTRICTED TO THE UNIVERSITY OF MISSOURI AT AUTHOR'S REQUEST.] While many studies have focused on the ability of state governments on state economic performance, this study investigates how exogenous factor in American federalism, in particular the functional responsibility of federal government on redistributive programs, characterizes state economic performance. This study focuses on three substantial subjects: (1) the reason why the federal government invests more on welfare programs; (2) the impact of federal welfare policy on state economic development policy innovation; and (3) the effect of major federal welfare programs on state economic performance such as economic growth and stability. The results suggest that federal welfare expenditures allocated to states affect state economic performance directly and indirectly. While federal spending on welfare areas stimulates state economic performance directly, it influences state economic performance indirectly through the positive association with state economic development policy innovation. The central implication of this finding is that the federal government helps states engage in a new economic development policy through the financial assistance that they receive in redistributive areas, and then the consequence of innovative economic development policy adopted by states will yield better regional economic performance.
Access is limited to the campus of the University of Missouri-Columbia.