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THE PRIVATE SECTOR IMPACT OF STATE AND LOCAL GOVERNMENT: HAS MORE BECOME BAD?
Author(s) -
TAYLOR LORI L.,
BROWN STEPHEN P. A.
Publication year - 2006
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1093/cep/byl002
Subject(s) - private sector , local government , government (linguistics) , economics , panel data , public sector , state (computer science) , business , public economics , labour economics , economic growth , economy , public administration , linguistics , philosophy , algorithm , political science , computer science , econometrics
Early research suggests some increases in state and local government spending more than offset the negative effects of the tax increases needed to fund them. More recent research finds the growth of state and local government generally discourages private sector growth. Using panel data on private employment, capital and output for the 48 contiguous states, the authors find that government size influences whether additional government helps or hinders private sector growth. The rapid growth of state and local government in the late 1980s likely outstripped the willingness to pay. With government growth moderating in the 1990s, however, the private sector response has become more favorable. (JEL H3 , H4 , R5 )