Do Democratic governors lower economic freedom? A regression discontinuity approach

Abstract

Using a panel of US states over the period 1985–2010, we examine how Democratic governors affect economic freedom compared to Republican governors. Economic freedom is measured using the Economic Freedom of North America Index. Given the emphasis that this index places on smaller government, we expect that having a Democratic governor leads to less economic freedom. However, using a regression discontinuity approach, we find that Democratic governors do not reduce economic freedom compared to Republican governors elected by a similar margin. An implication of this result is that governors must appeal to the median voter when making policy.