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Private demands for public capital: evidence from school bond referenda

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  • Balsdon, Ed
  • Brunner, Eric J.
  • Rueben, Kim

Abstract

This paper develops a framework for estimating demand for school infrastructure investment that is financed through local bond referenda. Our framework takes explicit account of the irregular and discrete nature of local capital investment and the objective functions of local school boards. Our empirical model consists of a three-equation system composed of a proposed spending equation, a vote equation, and a selection equation. Estimated income and price elasticities of demand for school infrastructure are similar to those found in studies of current school spending. We also find that school boards act like risk-averse, budget-maximizing agenda-setters.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 54 (2003)
Issue (Month): 3 (November)
Pages: 610-638

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Handle: RePEc:eee:juecon:v:54:y:2003:i:3:p:610-638

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Web page: http://www.elsevier.com/locate/inca/622905

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References

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  1. Holtz-Eakin, Douglas, 1993. "State-specific estimates of state and local government capital," Regional Science and Urban Economics, Elsevier, vol. 23(2), pages 185-209, April.
  2. Rubinfeld, Daniel L. & Shapiro, Perry, 1989. "Micro-estimation of the demand for schooling : Evidence from Michigan and Massachusetts," Regional Science and Urban Economics, Elsevier, vol. 19(3), pages 381-398, August.
  3. Brueckner, Jan K. & Joo, Man-Soo, 1991. "Voting with capitalization," Regional Science and Urban Economics, Elsevier, vol. 21(3), pages 453-467, November.
  4. Poterba, James M. & Rueben, Kim S., 2001. "Fiscal News, State Budget Rules, and Tax-Exempt Bond Yields," Journal of Urban Economics, Elsevier, vol. 50(3), pages 537-562, November.
  5. Holtz-Eakin, D. & Rosen, H.S., 1989. "The Rationality Of Municipal Capital Spending: Evidence From New Jersey," Discussion Papers 1989_28, Columbia University, Department of Economics.
  6. Sprunger, Philip & Wilson, John Douglas, 1998. "Imperfectly Mobile Households and Durable Local Public Goods: Does the Capitalization Mechanism Work?," Journal of Urban Economics, Elsevier, vol. 44(3), pages 468-492, November.
  7. Romer, Thomas & Rosenthal, Howard, 1979. "Bureaucrats versus Voters: On the Political Economy of Resource Allocation by Direct Democracy," The Quarterly Journal of Economics, MIT Press, vol. 93(4), pages 563-87, November.
  8. Banks, Jeffrey S., 1993. "Two-sided uncertainty in the monopoly agenda setter model," Journal of Public Economics, Elsevier, vol. 50(3), pages 429-444, March.
  9. Niskanen, William A, 1975. "Bureaucrats and Politicians," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 617-43, December.
  10. Epple, Dennis & Zelenitz, Allan, 1981. "The Implications of Competition among Jurisdictions: Does Tiebout Need Politics?," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1197-1217, December.
  11. Romer, Thomas & Rosenthal, Howard & Munley, Vincent G., 1992. "Economic incentives and political institutions: Spending and voting in school budget referenda," Journal of Public Economics, Elsevier, vol. 49(1), pages 1-33, October.
  12. Reid, Gary J., 1990. "The many faces of Tiebout bias in local education demand parameter estimates," Journal of Urban Economics, Elsevier, vol. 27(2), pages 232-254, March.
  13. repec:fth:coluec:419 is not listed on IDEAS
  14. Robert Inman, 1978. "Testing political economy’s ‘as if’ proposition: is the median income voter really decisive?," Public Choice, Springer, vol. 33(4), pages 45-65, December.
  15. Bergstrom, Theodore C & Goodman, Robert P, 1973. "Private Demands for Public Goods," American Economic Review, American Economic Association, vol. 63(3), pages 280-96, June.
  16. Douglas Holtz-Eakin & Harvey S. Rosen, 1993. "Municipal Construction Spending: An Empirical Examination," Economics and Politics, Wiley Blackwell, vol. 5(1), pages 61-84, 03.
  17. Douglas Holtz-Eakin & Harvey S. Rosen, 1989. "Municipal Construction Spending: An Empirical Examination," NBER Working Papers 2989, National Bureau of Economic Research, Inc.
  18. Bergstrom, Theodore C & Rubinfeld, Daniel L & Shapiro, Perry, 1982. "Micro-Based Estimates of Demand Functions for Local School Expenditures," Econometrica, Econometric Society, vol. 50(5), pages 1183-1205, September.
  19. Rubinfeld, Daniel L & Shapiro, Perry & Roberts, Judith, 1987. "Tiebout Bias and the Demand for Local Public Schooling," The Review of Economics and Statistics, MIT Press, vol. 69(3), pages 426-37, August.
  20. Borcherding, Thomas E & Deacon, Robert T, 1972. "The Demand for the Services of Non-Federal Governments," American Economic Review, American Economic Association, vol. 62(5), pages 891-901, December.
  21. Daniel Ingberman, 1985. "Running against the status quo: Institutions for direct democracy referenda and allocations over time," Public Choice, Springer, vol. 46(1), pages 19-43, January.
  22. Romer, Thomas & Rosenthal, Howard, 1982. "Median Voters or Budget Maximizers: Evidence from School Expenditure Referenda," Economic Inquiry, Western Economic Association International, vol. 20(4), pages 556-78, October.
  23. Rothstein, Paul, 1994. "Learning the preferences of governments and voters from proposed spending and aggregated votes," Journal of Public Economics, Elsevier, vol. 54(3), pages 361-389, July.
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Citations

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Cited by:
  1. Stephen Coate, 2013. "Evaluating Durable Public Good Provision using Housing Prices," NBER Working Papers 18767, National Bureau of Economic Research, Inc.
  2. Eric J. Brunner & Stephen L. Ross, 2009. "Is the Median Voter Decisive? Evidence of 'Ends Against the Middle' From Referenda Voting Patterns," Working papers 2009-02, University of Connecticut, Department of Economics, revised May 2010.
  3. Stephanie Riegg Cellini & Fernando Ferreira & Jesse Rothstein, 2008. "The Value of School Facilities: Evidence from a Dynamic Regression Discontinuity Design," Working Papers 1101, Princeton University, Department of Economics, Center for Economic Policy Studies..
  4. Wang, Wen & Duncombe, William D. & Yinger, John M., 2011. "School District Responses To Matching Aid Programs For Capital Facilities: A Case Study Of New York’S Building Aid Program," National Tax Journal, National Tax Association, vol. 64(3), pages 759-94, September.
  5. Eric J. Brunner & Stephen L. Ross, 2007. "How Decisive Is the Decisive Voter?," Working papers 2007-28, University of Connecticut, Department of Economics, revised Aug 2008.
  6. Brunner, Eric J. & Ross, Stephen L., 2010. "Is the median voter decisive? Evidence from referenda voting patterns," Journal of Public Economics, Elsevier, vol. 94(11-12), pages 898-910, December.
  7. Joshua Hall, 2006. "Fiscal competition and tax instrument choice: the role of income inequality," Economics Bulletin, AccessEcon, vol. 8(12), pages 1-8.
  8. repec:ebl:ecbull:v:8:y:2006:i:12:p:1-8 is not listed on IDEAS
  9. Ed Balsdon, 2007. "Property Value Capitalization And Municipal Open Space Referenda," Working Papers 0019, San Diego State University, Department of Economics.

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