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The Private Sector Impact Of State And Local Government: Has More Become Bad?

Author

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  • LORI L. TAYLOR
  • STEPHEN P. A. BROWN

Abstract

Early research suggests some increases in state and local government spending more than offset the negative effects of the tax increases needed to fund them. More recent research finds the growth of state and local government generally discourages private sector growth. Using panel data on private employment, capital and output for the 48 contiguous states, the authors find that government size influences whether additional government helps or hinders private sector growth. The rapid growth of state and local government in the late 1980s likely outstripped the willingness to pay. With government growth moderating in the 1990s, however, the private sector response has become more favorable. (JEL "H3", "H4", "R5") Copyright 2006 Western Economic Association International.

Suggested Citation

  • Lori L. Taylor & Stephen P. A. Brown, 2006. "The Private Sector Impact Of State And Local Government: Has More Become Bad?," Contemporary Economic Policy, Western Economic Association International, vol. 24(4), pages 548-562, October.
  • Handle: RePEc:bla:coecpo:v:24:y:2006:i:4:p:548-562
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    References listed on IDEAS

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    Cited by:

    1. Kamar Ali & Mark Partridge & Dan Rickman, 2012. "International immigration and domestic out-migrants: are domestic migrants moving to new jobs or away from immigrants?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 49(2), pages 397-415, October.
    2. Yihua Yu & Dan S. Rickman, 2013. "US state and local fiscal policies and non-metropolitan area economic performance: A spatial equilibrium analysis," Papers in Regional Science, Wiley Blackwell, vol. 92(3), pages 579-597, August.
    3. Deskins, John & Deskins, Sally & Hill, Brian, 2009. "How Do State Arts Appropriations Affect State Economic Growth?," The Review of Regional Studies, Southern Regional Science Association, vol. 39(3), pages 253-267.
    4. Hongbo Wang, 2016. "The Texas economic model, miracle or mirage? A spatial hedonic analysis," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(2), pages 393-417, March.

    More about this item

    JEL classification:

    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • H4 - Public Economics - - Publicly Provided Goods
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis

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