Postprint version. Published in Public Choice, Volume 59, Issue 3, December 1, 1988, pages 287-290.
NOTE: At the time of publication, the author Michael L. Marlow was not yet affiliated with Cal Poly.
The definitive version is available at https://doi.org/10.1007/BF00118542.
Chowdhury (1988) adopts an alternative technique to test for causality between expenditures and receipts of state and loyal governments and claims that he obtains results that are different from those reported in our 1987 paper (Marlow and Manage, 1987). We disagree with many of his criticisms. In this reply, we argue that he misinterprets our results and policy implications and that his results are really not much different from ours; in fact, sometimes his results provide stronger support of our hypothesis.