TY - JOUR
T1 - ECONOMIC FREEDOM AND INCOME LEVELS ACROSS U.S. STATES
T2 - A SPATIAL PANEL DATA ANALYSIS
AU - Hall, Joshua C.
AU - Lacombe, Donald J.
AU - Shaughnessy, Timothy M.
N1 - Publisher Copyright:
© 2018 Western Economic Association International
PY - 2019/1
Y1 - 2019/1
N2 - There is a large literature estimating the effect of economic freedom on economic growth or income levels. Most studies examine the relationship between economic freedom and growth or income levels for countries, while a few examine the relationship for U.S. states. Absent in the state-level literature is consideration of the presence of spatial spillovers affecting the freedom-income relationship. Neglecting to account for spatial autocorrelation can bias estimation results and therefore inferences drawn. We find evidence of a spatial pattern in real per-capita gross state product (GSP) that affects nonspatial estimates of the freedom-income relationship. Taking into account the direct and indirect effects of economic freedom on real per-capita GSP, we find a 10% increase in economic freedom is associated with a 5% increase in real per-capita GSP. (JEL E02, O47, R11).
AB - There is a large literature estimating the effect of economic freedom on economic growth or income levels. Most studies examine the relationship between economic freedom and growth or income levels for countries, while a few examine the relationship for U.S. states. Absent in the state-level literature is consideration of the presence of spatial spillovers affecting the freedom-income relationship. Neglecting to account for spatial autocorrelation can bias estimation results and therefore inferences drawn. We find evidence of a spatial pattern in real per-capita gross state product (GSP) that affects nonspatial estimates of the freedom-income relationship. Taking into account the direct and indirect effects of economic freedom on real per-capita GSP, we find a 10% increase in economic freedom is associated with a 5% increase in real per-capita GSP. (JEL E02, O47, R11).
UR - http://www.scopus.com/inward/record.url?scp=85057461821&partnerID=8YFLogxK
U2 - 10.1111/coep.12287
DO - 10.1111/coep.12287
M3 - Article
AN - SCOPUS:85057461821
SN - 1074-3529
VL - 37
SP - 40
EP - 49
JO - Contemporary Economic Policy
JF - Contemporary Economic Policy
IS - 1
ER -