IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/44986.html
   My bibliography  Save this paper

U.S. State and Local Fiscal Policies and Nonmetropolitan Area Economic Performance: A Spatial Equilibrium Analysis

Author

Listed:
  • Yu, Yihua
  • Rickman, Dan S.

Abstract

Faced with declining economic bases, many nonmetropolitan areas increasingly have become concerned about their future economic viability. A crucial dimension of this concern is the balancing of the need to be cost-competitive in terms of lower taxes against the need for provision of valued government services. Using a spatial equilibrium framework, this study econometrically examines the nexus between U.S. state and local fiscal policies and nonmetropolitan county growth in earnings and housing rents during the 1990s. The results suggest that state and local fiscal characteristics were important location determinants. Some characteristics could be clearly identified as having dominant firm profit effects while numerous others were identified as having household amenity effects. In addition, fiscal policies appeared to be more important for economic growth of nonmetropolitan counties which were remote from metropolitan areas than they were for counties adjacent to metropolitan areas.

Suggested Citation

  • Yu, Yihua & Rickman, Dan S., 2013. "U.S. State and Local Fiscal Policies and Nonmetropolitan Area Economic Performance: A Spatial Equilibrium Analysis," MPRA Paper 44986, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:44986
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/44986/1/MPRA_paper_44986.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64(5), pages 416-416.
    2. Dan S. Rickman & Shane D. Rickman, 2011. "Population Growth In High‐Amenity Nonmetropolitan Areas: What'S The Prognosis?," Journal of Regional Science, Wiley Blackwell, vol. 51(5), pages 863-879, December.
    3. John Deskins & Brian Hill, 2010. "State taxes and economic growth revisited: have distortions changed?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 44(2), pages 331-348, April.
    4. Tzu-Ling Huang & Peter F. Orazem & Darin Wohlgemuth, 2002. "Rural Population Growth, 1950–1990: The Roles of Human Capital, Industry Structure, and Government Policy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 615-627.
    5. Beeson, Patricia E & Eberts, Randall W, 1989. "Identifying Productivity and Amenity Effects in Interurban Wage Differentials," The Review of Economics and Statistics, MIT Press, vol. 71(3), pages 443-452, August.
    6. Mueller, Julie M. & Loomis, John B., 2008. "Spatial Dependence in Hedonic Property Models: Do Different Corrections For Spatial Dependence Result in Economically Significant Differences in Estimated Implicit Prices?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 33(2), pages 1-20.
    7. Guy Dumais & Glenn Ellison & Edward L. Glaeser, 2002. "Geographic Concentration As A Dynamic Process," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 193-204, May.
    8. Daniel P. McMillen, 2003. "Spatial Autocorrelation Or Model Misspecification?," International Regional Science Review, , vol. 26(2), pages 208-217, April.
    9. Daniel V. Rainey & Kevin T. McNamara, 1999. "Taxes and the Location Decision of Manufacturing Establishments," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 21(1), pages 86-98.
    10. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-1278, December.
    11. Patricia E. Beeson & Randall W. Eberts, 1987. "Identifying amenity and productivity cities using wage and rent differentials," Economic Review, Federal Reserve Bank of Cleveland, issue Q III, pages 16-25.
    12. Ronald C. Fisher, 1997. "Effects of state and local public services on economic development," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 53-82.
    13. 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.
    14. Dayton M. Lambert & Kevin T. McNamara, 2009. "Location determinants of food manufacturers in the United States, 2000–2004: are nonmetropolitan counties competitive?," Agricultural Economics, International Association of Agricultural Economists, vol. 40(6), pages 617-630, November.
    15. Partridge, Mark D. & Rickman, Dan S. & Ali, Kamar & Olfert, M. Rose, 2009. "Agglomeration spillovers and wage and housing cost gradients across the urban hierarchy," Journal of International Economics, Elsevier, vol. 78(1), pages 126-140, June.
    16. McGranahan, David A., 1999. "Natural Amenities Drive Rural Population Change," Agricultural Economic Reports 33955, United States Department of Agriculture, Economic Research Service.
    17. 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.
    18. Alison Felix, 2009. "Do state corporate income taxes reduce wages?," Economic Review, Federal Reserve Bank of Kansas City, vol. 94(Q II), pages 77-102.
    19. 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.
    20. Davis, Morris A. & Palumbo, Michael G., 2008. "The price of residential land in large US cities," Journal of Urban Economics, Elsevier, vol. 63(1), pages 352-384, January.
    21. Gyourko, Joseph & Tracy, Joseph, 1989. "The Importance of Local Fiscal Conditions in Analyzing Local Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1208-1231, October.
    22. Bayer, Patrick & Keohane, Nathaniel & Timmins, Christopher, 2009. "Migration and hedonic valuation: The case of air quality," Journal of Environmental Economics and Management, Elsevier, vol. 58(1), pages 1-14, July.
    23. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle, November.
    24. Stephan J. Goetz, 1997. "State- and County-Level Determinants of Food Manufacturing Establishment Growth: 1987–93," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 838-850.
    25. Graves, Philip E., 1980. "Migration and climate," MPRA Paper 19916, University Library of Munich, Germany.
    26. Hélène Laurent & Michel Mignolet & Olivier Meunier, 2009. "Regional policy: What is the most efficient instrument?," Papers in Regional Science, Wiley Blackwell, vol. 88(3), pages 491-507, August.
    27. repec:rre:publsh:v:33:y:2003:i:1:p:40-60 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rickman, Dan S. & Wang, Hongbo, 2018. "Two tales of two U.S. states: Regional fiscal austerity and economic performance," Regional Science and Urban Economics, Elsevier, vol. 68(C), pages 46-55.
    2. Dan Rickman & Hongbo Wang, 2020. "U.S. State And Local Fiscal Policy And Economic Activity: Do We Know More Now?," Journal of Economic Surveys, Wiley Blackwell, vol. 34(2), pages 424-465, April.
    3. Dan S. Rickman, 2013. "Should Oklahoma Be More Like Texas? A Taxing Decision," The Review of Regional Studies, Southern Regional Science Association, vol. 43(1), pages 1-22, Summer.
    4. Dan S. Rickman & Hongbo Wang, 2023. "Creating and maintaining film clusters: Synthetic control method analysis of the enactment and repeal of US state film incentives," Papers in Regional Science, Wiley Blackwell, vol. 102(2), pages 363-392, April.
    5. Rickman, Dan S. & Wang, Hongbo, 2022. "Estimating the Economic Effects of US State and Local Fiscal Policy: A Synthetic Control Method Matched Regression Approach," MPRA Paper 112575, University Library of Munich, Germany.
    6. 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.
    7. Martin Meurers & Johannes Moenius, 2020. "Market Potential and Fiscal Incentives Influence Firms’ Location Decisions: Evidence From U.S. Counties," Economic Development Quarterly, , vol. 34(2), pages 126-139, May.
    8. Dan S. Rickman & Hongbo Wang, 2024. "Estimating the economic effects of US state and local fiscal policy: A synthetic control method matching‐regression approach," Growth and Change, Wiley Blackwell, vol. 55(2), June.
    9. Dan S. Rickman & Hongbo Wang & John V. Winters, 2017. "Relative Teacher Salaries And The Decision To Teach," Contemporary Economic Policy, Western Economic Association International, vol. 35(3), pages 542-550, July.
    10. Mark D. Partridge & Dan S. Rickman, 2012. "Integrating Regional Economic Development Analysis and Land Use Economics," Economics Working Paper Series 1203, Oklahoma State University, Department of Economics and Legal Studies in Business.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Andrés Rodríguez-Pose & Tobias D. Ketterer, 2012. "Do Local Amenities Affect The Appeal Of Regions In Europe For Migrants?," Journal of Regional Science, Wiley Blackwell, vol. 52(4), pages 535-561, October.
    3. Dan Rickman & Hongbo Wang, 2020. "U.S. State And Local Fiscal Policy And Economic Activity: Do We Know More Now?," Journal of Economic Surveys, Wiley Blackwell, vol. 34(2), pages 424-465, April.
    4. Partridge, Mark D. & Rickman, Dan S., 2012. "Integrating regional economic development analysis and land use economics," MPRA Paper 38291, University Library of Munich, Germany.
    5. Dan S. Rickman, 2013. "Should Oklahoma Be More Like Texas? A Taxing Decision," The Review of Regional Studies, Southern Regional Science Association, vol. 43(1), pages 1-22, Summer.
    6. Dan S. Rickman & Shane D. Rickman, 2011. "Population Growth In High‐Amenity Nonmetropolitan Areas: What'S The Prognosis?," Journal of Regional Science, Wiley Blackwell, vol. 51(5), pages 863-879, December.
    7. Mark Ferguson & Kamar Ali & M. Rose Olfert & Mark Partridge, 2007. "Voting with Their Feet: Jobs versus Amenities," Growth and Change, Wiley Blackwell, vol. 38(1), pages 77-110, March.
    8. Jerome Segura III, 2017. "The effect of state and local taxes on economic growth: A spatial dynamic panel approach," Papers in Regional Science, Wiley Blackwell, vol. 96(3), pages 627-645, August.
    9. Juan Carlos Suárez Serrato & Owen Zidar, 2016. "Who Benefits from State Corporate Tax Cuts? A Local Labor Markets Approach with Heterogeneous Firms," American Economic Review, American Economic Association, vol. 106(9), pages 2582-2624, September.
    10. Carlianne Patrick, 2014. "Does Increasing Available Non-Tax Economic Development Incentives Result in More Jobs?," National Tax Journal, National Tax Association;National Tax Journal, vol. 67(2), pages 351-386, June.
    11. Alessandra Faggian & M. Rose Olfert & Mark D. Partridge, 2011. "Inferring regional well-being from individual revealed preferences: the 'voting with your feet' approach," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 5(1), pages 163-180.
    12. David Albouy, 2009. "What Are Cities Worth? Land Rents, Local Productivity, and the Capitalization of Amenity Values," NBER Working Papers 14981, National Bureau of Economic Research, Inc.
    13. John Carruthers & Gordon F. Mulligan, 2012. "The plane of living and the precrisis evolution of housing values in the USA," Journal of Economic Geography, Oxford University Press, vol. 12(4), pages 739-773, July.
    14. Yong Chen & David J. Lewis & Bruce Weber, 2016. "Conservation Land Amenities And Regional Economies: A Postmatching Difference-In-Differences Analysis Of The Northwest Forest Plan," Journal of Regional Science, Wiley Blackwell, vol. 56(3), pages 373-394, June.
    15. Partridge, Mark D. & Rickman, Dan S. & Ali, Kamar & Olfert, M. Rose, 2010. "Recent spatial growth dynamics in wages and housing costs: Proximity to urban production externalities and consumer amenities," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 440-452, November.
    16. Anil Rupasingha & Yongzheng Liu & Mark Partridge, 2015. "Rural Bound: Determinants of Metro to Non-Metro Migration in the United States," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(3), pages 680-700.
    17. Alexander W. Marré & Anil Rupasingha, 2020. "School quality and rural in‐migration: Can better rural schools attract new residents?," Journal of Regional Science, Wiley Blackwell, vol. 60(1), pages 156-173, January.
    18. Daniel C. Monchuk & John A. Miranowski & Dermot J. Hayes & Bruce A. Babcock, 2007. "An Analysis of Regional Economic Growth in the U.S. Midwest," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 29(1), pages 17-39.
    19. Mark D. Partridge & Dan S. Rickman & M. Rose Olfert & Ying Tan, 2015. "When Spatial Equilibrium Fails: Is Place-Based Policy Second Best?," Regional Studies, Taylor & Francis Journals, vol. 49(8), pages 1303-1325, August.
    20. Mark Partridge & Dan Rickman, 2010. "Computable General Equilibrium (CGE) Modelling for Regional Economic Development Analysis," Regional Studies, Taylor & Francis Journals, vol. 44(10), pages 1311-1328.

    More about this item

    Keywords

    Regional Fiscal Policies; Rural Development; Spatial Equilibrium;
    All these keywords.

    JEL classification:

    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:44986. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.