Studies in Sophistry: Rich States, Poor States 17


Today, ALEC released the latest assessment of state-by-state economic outlook and economic performance, authored by Arthur Laffer, Stephen Moore, and Jonathan Williams.

I have documented the uselessness of the RSPS economic outlook indices here, and here.

More recently, I used the RSPS rankings up through 2019 to predict state level GDP growth, comparing against the Beacon Hill Institute State Competitiveness Index and the Cato Institute Fiscal Report Card. The analysis is here. I reproduce Table 1, for state level GDP.

Columns 7-9 are the relevant ones. The coefficient should be negative and statistically significant so. Column 7 includes state specific variables like log population density (ldensity), precipitation (wet), temperateness (mild), distance from water (dist). Column 8 includes state level fixed effects while column 9 includes both state level and time fixed effects.

Given the higher the rankings (#1, #2,…) the faster the conjectured growth in GDP, the coefficient on RSPS should be negative. In only the specification — with state characteristics included — the coefficient as hypothesized, and then it isn’t statistically significant.





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