Ranking State Fiscal Structures using Theory and Evidence

Niel Bania () and Joe A. Stone ()
Additional contact information
Niel Bania: University of Oregon Department of Planning, Public Policy, and Management

University of Oregon Economics Department Working Papers from University of Oregon Economics Department

Abstract: This paper offers unique rankings of the extent to which fiscal structures of U.S. states contribute to economic growth. The rankings are novel in two key respects: they are well grounded in established growth theory, in which the effect of taxes depends both on the level of taxes and on the composition of expenditures; and they are derived from actual estimates of the link between fiscal structures and economic growth. Estimates for the latter yield a growth hill, in which the incremental effect of taxes spent on productive services and infrastructure initially rises, reaches a peak, and then declines. Rankings derived from these estimates differ sharply from typical rankings based on levels of taxation alone. Two hypothetical policy experiments highlight both the growth-hill effects of tax investments in productive services and infrastructure and the short- and long-term tradeoffs in attempting to fund strong social services.

JEL-codes: H2 H4 H7 E62 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: 2007-06-01
View list of references

Downloads: (external link)
http://economics.uor ... -11_Stone_Fiscal.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Access Statistics for this paper

More papers in University of Oregon Economics Department Working Papers from University of Oregon Economics Department
Contact information at EDIRC.
Series data maintained by Bill Harbaugh ().