Decoding the Relationship Between Economic Growth and Fiscal Health Insights from Local Governments in North Carolina

Main Article Content

Saman Afshan https://orcid.org/0000-0002-6742-7012
Ha B. Vien https://orcid.org/0000-0003-4231-6807

Keywords

Economic Growth, Fiscal Health, Local Governments

Abstract

This article explores the relationship between local economic development and local government fiscal health, emphasizing the critical role of fiscal policy in determining long-term success. Using data from 2017 to 2022 for all counties in North Carolina, we apply Granger causality analysis to examine the relationship between a county’s economic growth and its fiscal condition. Our findings show that fiscal health significantly influences local economic growth, indicating a unidirectional causality where better fiscal health can facilitate economic development. These observations add much-needed empirical evidence to the continuing literature on the importance of economic growth and the related fiscal policy choices.

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