Volatile States: Institutions, Policy, and the Performance of American State Economies

Why do American state economies grow at such vastly different rates and manifest such wide differences in living standards? Volatile States identifies the sources of rising living standards by examining the recent economic and fiscal history of the American states. With new insights about the factors that contribute to state economic success, the book departs from traditional analyses of economic performance in its emphasis on the role of volatility. Volatile States identifies institutions and policies that are key determinants of economic success and illustrates the considerable promise of a mean-variance criterion for assessing state economic performance. The mean-variance perspective amends applications of growth models that rely on the mobility of productive factors keyed to income levels alone. Simply measuring the level of growth in state economies reveals an incomplete and perhaps distorted picture of performance. Taking the volatility of state economies explicitly into account refines the whole notion of "economic success." This book is essential reading for economists, political scientists, and policy-makers who routinely confront questions about the consequences of alternative institutional arrangements and economic policy choices. W. Mark Crain is Professor of Economics and Research Associate, James M. Buchanan Center for Political Economy, George Mason University.

Table of Contents:
Champions of the state growth league --The end of state income convergence -- Volatile states: estimates of the risk-return trade-off -- Demise of the state sales tax -- Economic consequences of state tax policy -- Reliability of revenues from alternative tax instruments -- State budgets outgrow state incomes -- Fiscal uncertainty -- Political ideology and other drivers of state budget priorities -- Fresh perspectives on familiar problems.

About the Author :
W. Mark Crain is Professor of Economics and Director of the Center for Study of Public Choice at George Mason University. Dr. Crain has authored more than a hundred articles and books in the fields of economics and politics. Most of these works focus on fiscal policy, government regulation, and the organization of legislatures. In addition to his academics pursuits, Professor Crain has served on eight state and local government boards and commissions during the administrations of four Virginia governors, including the state's Advisory Board of Economists. Dr. Crain has previously been on the faculties at UCLA and Virginia Tech, and he was Assistant to the Director of the U.S. Office of Management and Budget. Dr. Crain holds a Bachelor of Science degree in Economics from the University of Houston, and a Ph.D. in Economics from Texas A&M University.

Review :
"In the vast and vigorous field of economic growth, Volatile States is the greatest of rarities: a book with a genuinely new idea. Crain provides important new perspectives on economic performance and fiscal policy that will be of interest to economists, political scientists, and policymakers."