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Estimating Costs and Benefits of Economic Growth: A CGE-Based Study of Tax Incentives in a Rapidly Growing Region

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Author Info

  • Byers, Steven
  • Cutler, Harvey
  • Davies, Stephen P.

Abstract

Municipalities have used tax incentives to attract manufacturing firms to counteract market failures, mobilize resources in blighted areas, and engage in bidding wars with other jurisdictions. These reasons have typically been remedies for regions experiencing unemployment and low growth. However, high growth areas still use tax incentives to manage growth. In these cases, the costs of growth, especially related to congestion, pollution, costs of city services and rising prices, must be compared to economic benefits resulting from a tax incentive. The case study in this paper is based on a proposal to the city of Fort Collins, Colorado by Hyundai Corporation, who requested a $25.5 million use tax rebate. This paper uses a data intensive computable general equilibrium (CGE) model to estimate endogenously the costs and benefits of growth. Results of the analysis suggest an $18.15 million rebate was warranted.

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Bibliographic Info

Article provided by Mid-Continent Regional Science Association in its journal Journal of Regional Analysis and Policy.

Volume (Year): 34 (2004)
Issue (Month): 2 ()
Pages:

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Handle: RePEc:ags:jrapmc:132285

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Web page: http://jrap-journal.org/index.htm
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Related research

Keywords: Community/Rural/Urban Development;

References

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  1. Small, Kenneth A. & Kazimi, Camilla, 1995. "On the Costs of Air Pollution from Motor Vehicles," University of California Transportation Center, Working Papers qt0sx81025, University of California Transportation Center.
  2. John Calfee & Clifford Winston & Randolph Stempski, 2001. "Econometric Issues In Estimating Consumer Preferences From Stated Preference Data: A Case Study Of The Value Of Automobile Travel Time," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 699-707, November.
  3. Greenwood, Michael J, 1975. "Research on Internal Migration in the United States: A Survey," Journal of Economic Literature, American Economic Association, vol. 13(2), pages 397-433, June.
  4. Greenwood, Michael J, et al, 1991. "Migration, Regional Equilibrium, and the Estimation of Compensating Differentials," American Economic Review, American Economic Association, vol. 81(5), pages 1382-90, December.
  5. Chang K. Seung & Thomas R. Harris & Jeffrey E. Eglin & Noelwah R. Netusil, 1999. "Application of a Computable General Equilibrium (CGE) Model to Evaluate Surface Water Reallocation Policies," The Review of Regional Studies, Southern Regional Science Association, vol. 29(2), pages 139-155, Fall.
  6. Dye, Richard F. & Merriman, David F., 2000. "The Effects of Tax Increment Financing on Economic Development," Journal of Urban Economics, Elsevier, vol. 47(2), pages 306-328, March.
  7. Seung, Chang K. & Englin, Jeffrey E. & Harris, Thomas R., 1997. "Application of Computable General Equilibrium Model to Derive Impacts of Surface Water Reallocation Policy," 1997 Annual Meeting, July 13-16, 1997, Reno\Sparks, Nevada 35841, Western Agricultural Economics Association.
  8. Calfee, John & Winston, Clifford, 1998. "The value of automobile travel time: implications for congestion policy," Journal of Public Economics, Elsevier, vol. 69(1), pages 83-102, July.
  9. Gary Gillespie & Peter Mcgregor & J. Kim Swales & Ya Ping Yin, 2001. "The Displacement and Multiplier Effects of Regional Selective Assistance: A Computable General Equilibrium Analysis," Regional Studies, Taylor & Francis Journals, vol. 35(2), pages 125-139.
  10. Mark D. Partridge & Dan S. Rickman, 1998. "Regional Computable General Equilibrium Modeling: A Survey and Critical Appraisal," International Regional Science Review, , vol. 21(3), pages 205-248, December.
  11. Timothy J. Bartik, . "Who Benefits from Local Job Growth: Migrants or Original Residents?," Upjohn Working Papers and Journal Articles tjb1993rs, W.E. Upjohn Institute for Employment Research.
  12. Jones, Rich & Whalley, John, 1989. "A Canadian regional general equilibrium model and some applications," Journal of Urban Economics, Elsevier, vol. 25(3), pages 368-404, May.
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