Those states that have recovered revenue lost during the great recession have done so due to factors largely beyond their control

The Great Recession of 2007-2009 meant a large hit to the revenues of U.S. states. Now, more than five years later, revenues in most of these states have recovered. But what has fuelled this recovery? Using data from across all 50 states, James Alm and David L. Sjoquist find that internal factors – such as the state’s economy, taxes, demographics, politics and policy – have had little or no effect on its revenue recovery. They argue that their results show that trends in state government revenues are largely influenced by broader, national, economic trends beyond the control of state governments.