Did Katrina boost freedom, wreck state capacity, or both?

We find that Hurricane Katrina had lasting impacts on Louisiana’s formal institutions. In the post-Katrina period, we find that actual Louisiana had persistently higher economic freedom scores for both GE [government employment] and PT [property tax] than the synthetic Louisiana that did not experience the hurricane. These findings imply that the hurricane led to a reduction in both PTs and GE, which indicates a decrease in the relative size of the public sector as a share of the state’s economy.

That is from a new paper by Veeshan Rayamajhee, Raymond J. March, and Corbin C.T. Clark, via the excellent Kevin Lewis.