Insights into policies that affect state government expenditures and revenues

his dissertation is composed of three papers. The first paper studies the effects of earmarking state lottery profits for educational spending. Since educational expenditures generally exceed the funds earmarked for education by a wide margin, this policy does not meaningfully constrain the legislature's ability to allocate aggregate profits across expenditure categories. Conventional economic reasoning therefore implies that this policy should have no effect on overall educational spending. I find, on the contrary, that a dollar of lottery profits earmarked for education increases current educational spending by roughly 36 cents more than a non-earmarked dollar and by 60 cents more than a dollar earmarked for other uses.;The second paper explores whether Democrats who control the state legislature are more likely to earmark funds for the environment in cases in which they subsequently lose control to a Republican government. This paper uses panel data covering the years 1984--1997 to estimate the probability a new environmental earmarking law is passed as a function of Democrats holding and subsequently losing majority control of the government. The results of this study provide no support for the hypothesis. In fact, Democrats with a large majority who subsequently lose this majority power following the next election are found to be less likely to earmark funds for the environment.;Finally, the third paper explores the effects of casino gambling on state lottery revenues using U.S. panel data from 1980--2000. Previous studies conclude that casinos cause a decrease in state lottery revenues. However, earlier literature has ignored the endogeneity of states' decisions to allow casinos. When ignoring endogeneity, this paper finds that lottery revenues per capita are on average...