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Community development by public wealth accumulation

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  • Barseghyan, Levon
  • Coate, Stephen

Abstract

This paper presents a dynamic political economy model of community development. The model highlights the role of public wealth accumulation in development. A community’s wealth is the difference between the value of its publicly-owned assets and liabilities. Wealth accumulation arises when residents tax-finance investment in durable public goods or pay down public debt. It stimulates future development because of the fiscal externality created by the collective ownership of community wealth. Moreover, when this development occurs, future residents have an incentive to engage in further accumulation because the cost can be spread over a larger group. In this way, public wealth accumulation can fuel gradual community development.

Suggested Citation

  • Barseghyan, Levon & Coate, Stephen, 2021. "Community development by public wealth accumulation," Journal of Urban Economics, Elsevier, vol. 121(C).
    • Handle: RePEc:eee:juecon:v:121:y:2021:i:c:s0094119020300681
    DOI: 10.1016/j.jue.2020.103297
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