Does Government Spending Influence Charitable Contributions or Vice Versa?

Federal Reserve Bank of St. Louis Working Paper No. 2007-012B

34 Pages Posted: 16 Oct 2007

See all articles by Thomas A. Garrett

Thomas A. Garrett

Federal Reserve Bank of St. Louis - Research Division

Russell M. Rhine

St. Mary's College of Maryland - Department of Economics

Date Written: October 2007

Abstract

We exploit the time series properties of charitable giving data to provide additional insights into the relationship between charitable contributions and government spending. Cointegration tests reveal a significant long-run relationship between several categories of charitable giving and government spending. Granger causality tests are designed to capture any short-run giving and spending relationship, and provide the opportunity to examine whether changes in fundraising efforts by charities influence government spending. Evidence suggests that charitable contributions to education responds quite differently to state and local government education expenditures versus federal government expenditures. We argue that the government spending and charitable giving relationship is dependent upon the source of government revenue and how this revenue is used by institutions of learning.

Keywords: Government Spending, Charity, Altruism, Crowding Out

JEL Classification: D12, D64, H3

Suggested Citation

Garrett, Thomas A. and Rhine, Russell M., Does Government Spending Influence Charitable Contributions or Vice Versa? (October 2007). Federal Reserve Bank of St. Louis Working Paper No. 2007-012B, Available at SSRN: https://ssrn.com/abstract=1021285 or http://dx.doi.org/10.2139/ssrn.1021285

Thomas A. Garrett (Contact Author)

Federal Reserve Bank of St. Louis - Research Division ( email )

411 Locust St
Saint Louis, MO 63011
United States

Russell M. Rhine

St. Mary's College of Maryland - Department of Economics ( email )

18952 E. Fisher Road
St. Mary's City, MD 20686-3001
United States

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