Creating a Cost-of-Doing-Business Index

Alexandru Voicu () and Michael L. Lahr ()

Urban/Regional from EconWPA

Abstract: In this paper we develop an index for comparing the cost of doing business across several metropolitan areas in the U.S. Such indices can be used as leading indicators of metropolitan economic growth. To create the index, we first identify factors that influence the change in business activity in metropolitan areas. We then create an instrument that allows us to compare the metropolitan areas on the basis of the climate that they provide for business development. We use both industry-based and pooled techniques to derive such an index. The index's variance decreases as the time horizon for which it is used increases. This is due in part to the declining influence of taxes. Although the industry-based estimates were hypothesized to be more accurate, the pooled technique facilitated statistical comparisons of the index across metropolitan areas. Based on the findings of the pooled regression, we find that automatic interpretation of higher values as denoting metropolitan areas with higher costs may often be invalid.

Keywords: Business Costs; Index; Metropolitan (search for similar items in EconPapers)
JEL-codes: R (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-geo and nep-ure
Date: 2004-03-25
Note: Type of Document - pdf; pages: 37
View list of references

Downloads: (external link)
http://129.3.20.41/eps/urb/papers/0403/0403008.pdf (application/pdf)

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

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpur:0403008

Access Statistics for this paper

More papers in Urban/Regional from EconWPA
Series data maintained by EconWPA ().