REPLICATION STUDY: Hoover and Pecorino (Public Choice, 2005)
This paper replicates and analyses a study by Hoover and Pecorino on Federal spending in US states (Hoover and Pecorino, 2005; henceforth H&P). H&P followed on path-breaking research by Atlas et al. (1995) in which evidence was claimed in favour of the "small state effect" namely, that since every state is represented by two Senators, small states have a disproportionate influence relative to their population size. H&P extended previous research by hypothesizing that if a small state effect existed, it should be most evident in Federal spending for (i) grants and (ii) procurement compared to other categories of Federal spending. They test this hypothesis using panel data of Federal spending in US states from 1983-1999. While we are able to closely replicate H&P?s original findings, we argue that that research suffers from several specification problems. When these are corrected, the evidence is mixed, with a substantial number of contradictory results.