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ERIC Number: EJ812572
Record Type: Journal
Publication Date: 2008
Pages: 20
Abstractor: As Provided
Reference Count: 18
ISBN: N/A
ISSN: ISSN-0276-8739
Ranking State Fiscal Structures Using Theory and Evidence
Bania, Neil; Stone, Joe A.
Journal of Policy Analysis and Management, v27 n4 p751-770 Fall 2008
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 trade-offs in attempting to fund strong social services. (Contains 5 tables, 1 figure, and 27 footnotes.)
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Publication Type: Journal Articles; Reports - Research
Education Level: N/A
Audience: Policymakers
Language: English
Sponsor: N/A
Authoring Institution: N/A