State Fiscal Policies and Regional Economic Activity

Matthias Uhl
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Matthias Uhl: University of Marburg

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

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.

Keywords: Spending multiplier; Tax multiplier; Subnational government (search for similar items in EconPapers)
JEL-codes: E62 H30 R50 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-mac, nep-pbe, nep-pub and nep-ure
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:201446

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