Do Casinos Cause Economic Growth?

Authors

  • Douglas M. Walker,

    1. College of Charleston, in Charleston, SC
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  • John D. Jackson

    1. College of Charleston, in Charleston, SC
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      Douglas M. Walker is an Associate Professor of Economics at the College of Charleston, in Charleston, SC; e-mail: dougwalker2@gmail.com. His research focuses on the social costs and benefits of legalized gambling, as well as the economic growth effects from gambling. John D. Jackson is a Professor of Economics at Auburn University; e-mail: jjackson@business.auburn.edu. His research interests include applied econometrics, regional economics, and macroeconomics.


Abstract

Abstract Casino gambling is a popular form of entertainment and is purported to have positive effects on host economies. The industry surely affects local labor markets and tax revenues. However, there has been little evidence on the effects of casino gambling on state economic growth. This paper examines that relationship using Granger-causality analysis modified for use with panel data. Our results indicate that there is no Granger-causal relationship between real casino revenues and real per capita income at the state level. The results are based on annual data from 1991 to 2005. These findings contradict an earlier study that found that casino revenues Granger-cause economic growth, using quarterly data from 1991 to 1996. Possible explanations for the differences in short- and long-run effects are discussed.

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