Hostname: page-component-586b7cd67f-2plfb Total loading time: 0 Render date: 2024-11-28T15:17:45.191Z Has data issue: false hasContentIssue false
  • English
  • Français

A spatial analysis of incomes and institutional quality: evidence from US metropolitan areas

Published online by Cambridge University Press:  29 April 2015

JAMIE BOLOGNA ,
ANDREW T. YOUNG  and
DONALD J. LACOMBE
JAMIE BOLOGNA*
Affiliation:
College of Business and Economics, West Virginia University, Morgantown, WV 26505-6025, USA
ANDREW T. YOUNG*
Affiliation:
College of Business and Economics, West Virginia University, Morgantown, WV 26505-6025, USA
DONALD J. LACOMBE*
Affiliation:
Department of Agricultural and Natural Resource Economics, Department of Economics, & Regional Research Institute, West Virginia University, Morgantown, WV 26506-6825, USA
*
*Email: [email protected]
**Email: [email protected]
***Email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

We use the Stansel (2013) metropolitan area economic freedom index and 25 conditioning variables to analyze the spatial relationships between institutional quality and economic outcomes across 381 U.S. metropolitan areas. Specifically, we allow for spatial dependence in both the dependent and independent variables and estimate how economic freedom impacts both per capita income growth and per capita income levels. We find that economic freedom and per capita income growth and income levels are directly and positively related. Furthermore, we find that the total (direct plus indirect) effects on all metropolitan areas are positive and larger in magnitude than the direct effects alone, indicating that freedom-enhancing reforms in one metropolitan area lead to positive-sum games with neighboring metropolitan areas.

Type
Research Article
Information
Journal of Institutional Economics , Volume 12 , Issue 1 , March 2016 , pp. 191 - 216
Copyright
Copyright © Millennium Economics Ltd 2015 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Acemoglu, D., Johnson, S., and Robinson, J. (2005), ‘Institutions as a Fundamental Cause of Economic Growth’, in Aghion, P. and Durlauf, S. (eds.), Handbook of Economic Growth, Amsterdam: Elsevier.Google Scholar
Ahmad, M. and Hall, S. G. (2012), ‘Institutions-Growth Spatial Dependence: An Empirical Test’, Procedia-Social and Behavioral Sciences, 65: 925–930.Google Scholar
Arbia, G., Battisti, M., and Di Vaio, G. (2010), ‘Institutions and Geography: Empirical Test of Spatial Growth Models for European Regions’, Economic Modeling, 27: 12–21.Google Scholar
Ashby, N. (2007), ‘Economic Freedom and Migration Flows Between US States’, Southern Economic Journal, 73: 677–697.Google Scholar
Ashby, N., Bueno, A., and McMahon, F. (2011), Economic Freedom of North America 2011, Vancouver: Fraser Institute.Google Scholar
Ayal, E. B. and Karras, G. (1998), ‘Components of Economic Freedom and Growth: An Empirical Study’, Journal of Developing Areas, 32: 327–338.Google Scholar
Besley, T. and Case, A. (1995), ‘Incumbent Behavior: Vote-Seeking, Tax-Setting, and Yardstick Competition’, American Economic Review, 85: 25–45.Google Scholar
Corrado, L. and Fingleton, B. (2012), ‘Where is the Economics in Spatial Econometrics?’, Journal of Regional Science, 52: 210–239.Google Scholar
Dawson, J. W. (1998), ‘Institutions, Investment, and Growth: New Cross-Country and Panel Data Evidence,’ Economic Inquiry, 36: 603–619.CrossRefGoogle Scholar
de Haan, J. and Sturm, J.-E. (2000), ‘On the Relationship Between Economic Freedom and Economic Growth’, European Journal of Political Economy, 16: 215–241.CrossRefGoogle Scholar
Easton, S. and Walker, M. A. (1997), ‘Income, Growth, and Economic Freedom’, American Economic Review, 87: 328–332.Google Scholar
Elhorst, J. P. (2010), ‘Applied Spatial Econometrics: Raising the Bar’, Spatial Economic Analysis, 5: 9–28.Google Scholar
Garrett, T. A. and Rhine, R. M. (2011), ‘Economic Freedom and Employment Growth in U.S. States’, Federal Reserve Bank of St. Louis Review, 93: 1–18.Google Scholar
Gwartney, J., Lawson, R. A., and Hall, J. C. (2013), Economic Freedom of the World: 2013 Annual Report, Vancouver: Fraser Institute.Google Scholar
Gwartney, J. D., Lawson, R., and Holcombe, R. G. (1999), ‘Economic Freedom and the Environment for Economic Growth’, Journal of Institutional and Theoretical Economics, 155: 643–663.Google Scholar
Hall, J. C. and Lawson, R. A. (2014), ‘Economic Freedom of the World: An Accounting of the Literature’, Contemporary Economic Policy, 32: 1–19.Google Scholar
Helpman, E. (ed.) (1998), Institutions and Economic Performance, Cambridge: Harvard University Press.Google Scholar
Higgins, M. J., Levy, D., and Young, A. T. (2006), ‘Growth and Convergence Across the U.S.: Evidence from County-Level Data’, Review of Economics and Statistics, 88, 671–681.Google Scholar
Higgins, M. J., Young, A. T. and Levy, D. (2009), ‘Federal, State, and Local Governments: Evaluating Their Separate Roles in US Growth’, Public Choice, 139: 493–507.Google Scholar
Karabegović, A., Samida, D., Schlegel, C., and McMahon, F. (2003), ‘North American Economic Freedom: An Index of 10 Canadian Provinces and 50 US States’, European Journal of Political Economy, 19: 431–452.Google Scholar
Kelejian, H. H.Murrell, P., Shepotylo, O. (2013), ‘Spatial spillovers in the development of institutions’, Journal of Development Economics, 101: 297–315.Google Scholar
Kreft, S. F. and Sobel, R. S. (2005), ‘Public Policy, Entrepreneurship, and Economic Freedom’, Cato Journal, 25: 595–616.Google Scholar
Lawson, R. A. (2006), ‘On Testing the Connection Between Economic Freedom and Growth’, Econ Journal Watch, 3: 398–406.Google Scholar
LeSage, J. P. and Fischer, M. M. (2009), ‘Spatial Growth Regressions: Model Specification, Estimation and Interpretation’, Spatial Economic Analysis, 3: 275–304.Google Scholar
LeSage, J. P. and Pace, R. K. (2009), Introduction to Spatial Econometrics, Boca Routon: Taylor and Francis CRC Press.Google Scholar
LeSage, J. P. and Pace, R. K. (2014), ‘The Biggest Myth in Spatial Econometrics’, Econometrics 2: 217–249.Google Scholar
Lundström, S. (2005), ‘The Effect of Democracy on Different Categories of Economic Freedom’, European Journal of Political Economy, 21: 967–980.Google Scholar
Stansel, D. (2013), ‘An Economic Freedom Index for U.S. Metropolitan Areas’, Journal of Regional Analysis and Policy, 43: 3–20.Google Scholar
Stansel, D. and McMahon, F. (2013), Economic Freedom of North America 2013, Vancouver: Fraser Institute.Google Scholar
Sturm, J. E. and de Haan, J. (2001), ‘How Robust is the Relationship Between Economic Freedom and Economic Growth?’, Applied Economics, 33: 839–844.Google Scholar
Wiseman, T. and Young, A. T. (2013), ‘Economic Freedom, Entrepreneurship, & Income Levels: Some US State-Level Empirics’, American Journal of Entrepreneurship, 6: 100–119.Google Scholar
Young, A. T., Higgins, M. J., and Levy, D. (2010), ‘Robust Correlates of County-Level Growth in the US’, Applied Economics Letters, 17: 293–296.Google Scholar
Young, A. T., Higgins, and Levy, D. (2013), ‘Heterogeneous Convergence’, Economics Letters, 120: 238–241.CrossRefGoogle Scholar
Young, A. T. and Sheehan, K. M. (2014), ‘Foreign Aid, Institutional Quality, and Growth’, European Journal of Political Economy 36: 195–208.Google Scholar