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State Fiscal Policies and Regional Economic Activity

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  • Matthias Uhl

    (University of Marburg)

Abstract

In this paper, I estimate a structural panel vector autoregression to study the consequences of changes in U.S. state government fiscal policies for local economic activity in the short-term. My main result is that the state-level spending multiplier is relatively small and the tax multiplier relatively large. After four years, the government spending multiplier is 0.6 and the tax multiplier -2.62. This conclusion is found to be robust across different model specifications. I also find that both state spending and state revenue shocks increase out of state output.

Suggested Citation

  • Matthias Uhl, 2014. "State Fiscal Policies and Regional Economic Activity," MAGKS Papers on Economics 201446, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
  • Handle: RePEc:mar:magkse:201446
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    File URL: http://www.uni-marburg.de/fb02/makro/forschung/magkspapers/462014.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Spending multiplier; Tax multiplier; Subnational government;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General

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