Do State Business Climate Indicators Explain Relative Economic Growth at State Borders?

25 Pages Posted: 6 Jun 2016

See all articles by Georgeanne M. Artz

Georgeanne M. Artz

Iowa State University - Department of Economics

Kevin Duncan

Iowa State University - Department of Economics

Arthur Hall

University of Kansas - School of Business - Economics Area

Peter F. Orazem

Iowa State University and IZA; IZA Institute of Labor Economics

Date Written: June 2016

Abstract

This study submits 11 business climate indexes to tests of their ability to predict relative economic performance on either side of state borders. Our results show that most business climate indexes have no ability to predict relative economic growth regardless of how growth is measured. Some are negatively correlated with relative growth. Many are better at reporting past growth than at predicting the future. In the end, the most predictive business climate index is the Grant Thornton Index which was discontinued in 1989.

Suggested Citation

Artz, Georgeanne M. and Duncan, Kevin and Hall, Arthur and Orazem, Peter Francis, Do State Business Climate Indicators Explain Relative Economic Growth at State Borders? (June 2016). Journal of Regional Science, Vol. 56, Issue 3, pp. 395-419, 2016, Available at SSRN: https://ssrn.com/abstract=2790381 or http://dx.doi.org/10.1111/jors.12261

Georgeanne M. Artz (Contact Author)

Iowa State University - Department of Economics ( email )

260 Heady Hall
Ames, IA 50011
United States

Kevin Duncan

Iowa State University - Department of Economics ( email )

260 Heady Hall
Ames, IA 50011
United States

Arthur Hall

University of Kansas - School of Business - Economics Area ( email )

1300 Sunnyside Avenue
Lawrence, KS
United States

Peter Francis Orazem

Iowa State University and IZA ( email )

260 Heady Hall
Ames, IA 50011
United States
515-294-8656/515-294-7740 (Phone)
515-294-0221 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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