I use a spatial Durbin model to estimate the effects of taxes on state economic growth. Results indicate that taxes have negative short-run and long-run own-state and spatial spillover effects on state growth.

type="main" <title type="main">ABSTRACT</title> <p>This note examines the correlation between income inequality and economic growth using a panel of income distribution data for 3,109 counties of the U.S. Using the System Generalized Method of Moments (GMM) approach, we find that for the entire sample of 3,109 counties, an...</p>

Based on an estimated dynamic spatial Durbin model, we find that the direct effect of a one-point increase in a county’s inequality is associated with a 3.3% decrease in its growth, while one-point increases in inequality in a county’s neighbors decrease its growth by 4.8%.