Honors College

Document Type

Honors Thesis

Publication Date

Spring 2014


Today’s complex sociopolitical context features an increasing determent of fundamental bipartisan principles and negotiation at both the federal and state levels of government. A competitive political environment akin to post-Civil War times, amplified by growing partisan polarization and politicians’ quest for party allegiance and self-reward, pervasively discourages productive compromising efforts to work across the isle. We believe this hinders government’s sole and rather straightforward fiscal duty: to provide stable, healthy, and predictable economic conditions for its constituents. Credit ratings offer a window into the interaction of public policy, political uncertainty, and economic performance, which all lie at the nucleus of the political economy. Present literature provides a variety of studies concerning the adverse economic effects of partisan gridlock on fiscal efforts. Very few, however, go so far as to specifically examine this at the state level, let alone the inaugural political realm for many of today’s congressional members: the state house.

We reference previously successful models similar to this nature and uniquely construct a polychotomous ordinal dependent variable for several multinomial ordered probit models. These models seek to explain the economic side effects of three indicators of political instability: state government competitiveness, polarization in the lower house, and party control in the lower house. We conclude substantial insignificance for two out of the three indicators, primarily due to the structure of our dependent variable. Our analysis also provides evidence that, on average, Republican control of the lower house increases the chances of a higher credit rating and economic stability within a given state.