Taxes, Government Expenditures, and State Economic Growth: The Role of Nonlinearities
AbstractBarroÃ•s (1990) model of endogenous growth implies that economic growth will initially rise with an increase in taxes directed toward Ã’productiveÃ“ expenditures (e.g., education, highways, and streets), but will subsequently decline. Previous tests of the model, including Barro (1989, 1990) and recently Bleaney et al (2001), focus on whether the linear incremental effect of taxes is positive, negative, or zero, with substantial evidence for all three conclusions. In this study, we test for nonlinearity directly by incorporating nonlinear effects for taxes, and based on U.S. states find that the incremental effect of taxes directed toward productive government expenditures is initially positive, but eventually declines. U.S. states on average appear to under invest in expenditures on productive government activities.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Oregon Economics Department in its series University of Oregon Economics Department Working Papers with number 2006-7.
Date of creation: 01 Jun 2006
Date of revision:
Contact details of provider:
Postal: 1285 University of Oregon, 435 PLC, Eugene, OR 97403-1285
Phone: (541) 346-4661
Fax: (541) 346-1243
Web page: http://economics.uoregon.edu/
More information through EDIRC
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-07-15 (All new papers)
- NEP-EDU-2006-07-15 (Education)
- NEP-GEO-2006-07-15 (Economic Geography)
- NEP-PBE-2006-07-15 (Public Economics)
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bill Harbaugh).
If references are entirely missing, you can add them using this form.