Are State-local Government Expenditures Converging? : New Evidence Based on Sequential Unit Root Tests
(2017) In Empirical Economics 53(2). p.373-403- Abstract
- Large and persistent gaps in subnational public expenditure have important implications regarding growth, equity, and migration. In this context, we revisit the question of expenditure convergence across the American states to provide more nuanced evidence than found by a small number of previous studies. We employ a methodology due to Smeekes (Bootstrap sequential tests to determine the stationary units in a panel, 2011) that sequentially tests for unit roots in pairwise (real per capita) expenditure gaps based on user specified fractions. In a panel of 48 combined state–local government units (1957–2008), we found that expenditures on highways, sanitation, utility, and education were far more convergent than expenditures on health and... (More)
- Large and persistent gaps in subnational public expenditure have important implications regarding growth, equity, and migration. In this context, we revisit the question of expenditure convergence across the American states to provide more nuanced evidence than found by a small number of previous studies. We employ a methodology due to Smeekes (Bootstrap sequential tests to determine the stationary units in a panel, 2011) that sequentially tests for unit roots in pairwise (real per capita) expenditure gaps based on user specified fractions. In a panel of 48 combined state–local government units (1957–2008), we found that expenditures on highways, sanitation, utility, and education were far more convergent than expenditures on health and hospitals, police and fire protection, and public welfare. There was little evidence of “club convergence” based on the proportion of intraregional convergent pairs. Several historically high-grant receiving states showed relatively strong evidence of convergence. Our results bode well for future output convergence and opportunities for Tiebout-type migration across jurisdictions. They also imply a diminished role for public infrastructure and education spending in business location choices over time and a mixed role for federal grants in inducing convergence. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/4359d080-1877-4c5d-ac48-c1e4812a6210
- author
- Westerlund, Joakim LU and Mahdavi, Saeid
- organization
- publishing date
- 2017-09
- type
- Contribution to journal
- publication status
- published
- subject
- keywords
- State and local governments, Regional economics, Convergence, Sequential unit root tests
- in
- Empirical Economics
- volume
- 53
- issue
- 2
- pages
- 373 - 403
- publisher
- Physica Verlag
- external identifiers
-
- scopus:84982273140
- scopus:84982273140
- wos:000407847400001
- ISSN
- 0377-7332
- DOI
- 10.1007/s00181-016-1123-3
- language
- English
- LU publication?
- yes
- id
- 4359d080-1877-4c5d-ac48-c1e4812a6210
- date added to LUP
- 2016-10-28 11:43:44
- date last changed
- 2024-05-17 14:49:50
@article{4359d080-1877-4c5d-ac48-c1e4812a6210,
abstract = {{Large and persistent gaps in subnational public expenditure have important implications regarding growth, equity, and migration. In this context, we revisit the question of expenditure convergence across the American states to provide more nuanced evidence than found by a small number of previous studies. We employ a methodology due to Smeekes (Bootstrap sequential tests to determine the stationary units in a panel, 2011) that sequentially tests for unit roots in pairwise (real per capita) expenditure gaps based on user specified fractions. In a panel of 48 combined state–local government units (1957–2008), we found that expenditures on highways, sanitation, utility, and education were far more convergent than expenditures on health and hospitals, police and fire protection, and public welfare. There was little evidence of “club convergence” based on the proportion of intraregional convergent pairs. Several historically high-grant receiving states showed relatively strong evidence of convergence. Our results bode well for future output convergence and opportunities for Tiebout-type migration across jurisdictions. They also imply a diminished role for public infrastructure and education spending in business location choices over time and a mixed role for federal grants in inducing convergence.}},
author = {{Westerlund, Joakim and Mahdavi, Saeid}},
issn = {{0377-7332}},
keywords = {{State and local governments; Regional economics; Convergence; Sequential unit root tests}},
language = {{eng}},
number = {{2}},
pages = {{373--403}},
publisher = {{Physica Verlag}},
series = {{Empirical Economics}},
title = {{Are State-local Government Expenditures Converging? : New Evidence Based on Sequential Unit Root Tests}},
url = {{http://dx.doi.org/10.1007/s00181-016-1123-3}},
doi = {{10.1007/s00181-016-1123-3}},
volume = {{53}},
year = {{2017}},
}