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Tax policy and state economic growth: The long-run and short-run of it

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  • Ojede, Andrew
  • Yamarik, Steven

Abstract

This paper uses a pooled mean group (PMG) estimator to evaluate the effects of tax policy on state-level growth. We find that property and sales tax rates have negative effects on long-run income growth, while income tax rates have no impact.

Suggested Citation

  • Ojede, Andrew & Yamarik, Steven, 2012. "Tax policy and state economic growth: The long-run and short-run of it," Economics Letters, Elsevier, vol. 116(2), pages 161-165.
    • Handle: RePEc:eee:ecolet:v:116:y:2012:i:2:p:161-165
    DOI: 10.1016/j.econlet.2012.02.023
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    References listed on IDEAS

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    1. Stephen M. Miller & Frank S. Russek, 1997. "Fiscal Structures and Economic Growth at the State and Local Level," Public Finance Review, , vol. 25(2), pages 213-237, March.
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    3. Pesaran, M. Hashem & Smith, Ron, 1995. "Estimating long-run relationships from dynamic heterogeneous panels," Journal of Econometrics, Elsevier, vol. 68(1), pages 79-113, July.
    4. Helms, L Jay, 1985. "The Effect of State and Local Taxes on Economic Growth: A Time Series-Cross Section Approach," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 574-582, November.
    5. Reed, W. Robert, 2008. "The Robust Relationship Between Taxes and U.S. State Income Growth," National Tax Journal, National Tax Association;National Tax Journal, vol. 61(1), pages 57-80, March.
    6. Yamarik, Steven, 2000. "Can tax policy help explain state-level macroeconomic growth?," Economics Letters, Elsevier, vol. 68(2), pages 211-215, August.
    7. Harden, J. William & Hoyt, William H., 2003. "Do States Choose Their Mix of Taxes to Minimize Employment Losses?," National Tax Journal, National Tax Association;National Tax Journal, vol. 56(1), pages 7-26, March.
    8. Carroll, Robert & Wasylenko, Michael J., 1994. "Do State Business Climates Still Matter? -- Evidence of a Structural Change," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(1), pages 19-37, March.
    9. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    10. Michael Wasylenko, 1997. "Taxation and economic development: the state of the economic literature," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 37-52.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Tax; Regional growth; PMG;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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