MUNICIPAL CONSTRUCTION SPENDING: AN EMPIRICAL EXAMINATION

DOUGLAS HOLTZ‐EAKIN, HARVEY S. ROSEN

Research output: Contribution to journalArticle

19 Scopus citations

Abstract

Despite widespread concern and discussion, no consensus exists concerning the causes of the “infrastructure crisis” or its implications for the efficiency of government decision‐making more generally. We investigate several models of the determination of local public capital expenditures. Using Euler equation methods, we cannot reject the hypothesis that construction spending is determined by unconstrained, forward looking municipal planning. Consistent with this result, the stochastic structure of resource flows is an important feature of the determination of construction spending. Only unanticipated changes in a community's resources alter its demand for structures, with an unanticipated increase of one dollar increasing current construction spending by about 5.6 cents.

Original languageEnglish (US)
Pages (from-to)61-84
Number of pages24
JournalEconomics & Politics
Volume5
Issue number1
DOIs
StatePublished - Mar 1993

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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