The effect of state and local taxes on economic growth: A spatial dynamic panel approach

Segura, Jerome

doi:10.1111/pirs.12221

Cited by 15 publications

(17 citation statements)

References 71 publications

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“…() concluded there were spillover effects of state policy, suggesting cooperation was needed among states. Segura () estimated a spatial dynamic panel model and found evidence of spatial spillovers that reduced the estimated effects of a state's own fiscal policy.…”

Section: Recent Trends In the Literaturementioning

confidence: 99%

U.S. State and Local Fiscal Policy and Economic Activity: Do We Know More Now?

Rickman

Wang

2019

Journal of Economic Surveys

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Early reviews of the academic literature on the economic effects of state and local taxes and expenditures suggested that not enough was known upon which to base policy. The reviews called for better data and improvements in empirical methodology. This paper reviews studies conducted since the early literature reviews to assess our current state of knowledge. The conclusion of the study is that we know more now. But our knowledge is unlikely to ever be sufficient to provide universal policy guidance. Rather, we suggest that more research is needed on specific state and local policies for specific circumstances, consistent with the general principles that guide place‐based policy.

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Section: Recent Trends In the Literaturementioning

confidence: 99%

U.S. State and Local Fiscal Policy and Economic Activity: Do We Know More Now?

Rickman

Wang

2019

Journal of Economic Surveys

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“…To show that our spatial diffusion processes meet stationarity and/or stability conditions, we report estimated parameter values of

λ, φ,

and

Ω .

. These parameter estimates reported underneath of Tables , , , , and all satisfy stationarity conditions as in Segura (), i.e.,

Ω - φ \geq 0

and

- 1 + Ω - φ < λ .

These stationarity conditions are stricter than those suggested in Yu, de Jong, and Lee () and Lee and Yu (). Our parameter estimates do meet all stationarity conditions as well as satisfaction of characteristic roots falling within the unit circle as discussed in Elhorst () on pages 97–99.…”

Section: Empirical Results and Discussionmentioning

confidence: 85%

“…We estimate a dynamic spatial Durbin model as described in Elhorst (), Debarsy, Ertur, and LeSage (), and Segura () to investigate the short‐ and long‐run growth effects of productive government spending on state real per capita income growth. Letting

g_{i t}

represent the growth rate in real per capita income growth in state

i

at time t and

g_{j t}

as a notation for growth rates in neighboring states j at time t , the dynamic spatial Durbin model can be written as:

g_{i t} = λ g_{i, t - 1} + ϕ \sum_{j = 1}^{N} ω_{i} true(d_{i j} true) g_{i, t - 1} + Ω \sum_{j = 1}^{N} ω_{i} true(d_{i j} true) g_{j t} + {X^{'}}_{i t} β + \sum_{j = 1}^{N} ω_{i} true(d_{i j} true) {X^{'}}_{j t} γ + δ_{t} + φ_{i} + ɛ_{i t}

where

λ

is defined as the autoregressive time‐dependence parameter.…”

Section: Methodology and Datamentioning

confidence: 99%

“…Spatial regression models. We estimate a dynamic spatial Durbin model as described in Elhorst (2012b), Debarsy, Ertur, and LeSage (2012), and Segura (2017) to investigate the short-and long-run growth effects of productive government spending on state real per capita income growth. Letting g it represent the growth rate in real per capita income growth in state i at time t and g jt as a notation for growth rates in neighboring states j at time t, the dynamic spatial Durbin model can be written as:…”

Section: Growth Effects Of Productive Government Spending 125mentioning

confidence: 99%

“…On the tax side, while several studies, including Reed (), Ojede and Yamarik () and recently Segura (), have documented a statistically significant negative direct effect of taxation on state income growth, it is not implausible to expect positive spillover effects of taxes. In an effort to avoid higher taxes, individuals may shop and work in nearby states in order to pay lower sales and income taxes respectively, thereby increasing growth in these nearby states; corporations might locate in nearby states with lower corporate income taxes.…”

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

The Direct and Indirect (Spillover) Effects of Productive Government Spending on State Economic Growth

Ojede¹,

Atems²,

Yamarik³

2017

Growth and Change

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Using data on 48 contiguous U.S. states and a spatial econometric approach, this paper examines short‐ and long‐run effects of productive higher education and highway infrastructure spending financed by different revenue sources on state economic growth. Following the Lagrange Multiplier, Wald, and Likelihood Ratio tests, the data are found to be characterized by both spatial lag and spatial error processes, leading to the estimation of a dynamic spatial Durbin model. By decomposing results of the dynamic spatial Durbin model into short‐ and long‐run direct as well as indirect (spillover) effects, we show that accounting for spillover effects provides a more comprehensive approach to uncovering the effects of productive government spending on growth. We find that, regardless of the financing source, productive higher education and highway spending have statistically significant short‐ and long‐run direct as well as spillover effects on state income growth.

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