Animal experts now recognize that leaving a dog tied outdoors can lead to temperament issues. There is actually a term for this-barrier frustration.
When a dog is tied up for extended periods of time - watching activity going on around him that he cannot participate in -that dog ends up very frustrated.
A new concern facing dogowners is leaving dogs outside in a fenced in yard for extended periods of time. The results are the same as tying them. Dogs usually begin expressing their frustration with nuisance barking. Some dogs will not go beyond barking. Some dogs will exhibit destructive behavior (digging, chewing on your siding, etc).
Some dogs, especially those bred for herding or guarding, will frequently escalate to barrier aggression. Their frustration builds to a level that actually creates aggression. If they get the opportunity to bite a person (or another dog) to vent some of that frustration, they will. Once your dog has a bite history, you will have pressure from your neighbors and your insurance company to eliminate the risk. This usually means having to euthanize your dog.
To a dog experiencing barrier frustration, the activity going on outside their reach is torment. Although the neighborhood children may not mean to tease the dog watching from behind the fence, the dog feels the same anxiety and frustration he would if the children were intentionally antagonizing him.
If your dog is already exhibiting some barrier frustration-do not leave him out in the yard. Go outside with your dog-play ball with him, teach him a new trick. Find a friend or neighbor to feed and pet your dog. Ideally have them greet him in your yard, if he has not exhibited any aggression yet.
Try to make your dog think that people approaching it is a good thing-they may have yummy treats, or just a scratch on the head. With all dogs-do not let them stay outside barking-bring them inside. If they are still working on house manners, pop them in a crate while you make dinner or tether them near you.