Monday, October 11, 2010: 8:50 AM
This paper explores the relationship between government structure and economic growth using data corresponding to metropolitan statistical areas (MSAs). Specifically, it examines the relationship between local decentralization and MSA economic growth using spatial econometric modeling to correct for any spatially correlated omitted variables. Consistent with the results of Stansel (2005), we hypothesize that the results will indicate that greater decentralization within the MSA will correspond to enhanced economic growth across the MSA. This is due to the efficiency advantages of decentralization in that local governments are in a better position to obtain and react to dispersed knowledge than are centralized governments and that intergovernmental competition limits the ability of governments to extract rents from the constituency.