Spatial Dependence in Models of State Fiscal Policy Convergence
AbstractWe apply spatial econometric techniques to models of state and local fiscal policy convergence. Our work extends the work of Scully and Annala in much the same way that Rey and Montouri extended the literature on income convergence among U.S. states. Our results indicate that most fiscal policies have been converging and that the growth paths of state and local fiscal policies are not independent. In addition, we find that total expenditures have been converging faster than output, whereas total tax revenues have been converging slower than output. Our models further demonstrate that state expenditure growth is dependent on expenditure growth in economically and demographically similar states, while output growth and revenue growth in a state are dependent on output growth and revenue growth, respectively, in contiguous states.
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Bibliographic InfoArticle provided by in its journal Public Finance Review.
Volume (Year): 35 (2007)
Issue (Month): 3 (May)
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- Cletus C. Coughlin & Thomas A. Garrett & Rubén Hernández-Murillo, 2006. "Spatial dependence in models of state fiscal policy convergence," Working Papers 2006-001, Federal Reserve Bank of St. Louis.
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