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A Note on Local Public Investment and Debt Limitation in a Federation

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Author Info
Alfons J. Weichenrieder () (Goethe University Frankfurt, Oxford University Centre for Business Taxation, and CESifo)

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Abstract

The paper considers the local provision of public infrastructure in symmetric jurisdictions when population is mobile. It shows that an inflexible deficit limitation may result in too little local public investment if the population is mobile. Conversely, given the existence of migration externalities, implementing Musgrave’s pay as you use finance, according to which new debt should match net investment, can lead to optimal local investment.

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File URL: http://www.taloustieteellinenyhdistys.fi/images/stories/fep/fep0901_1.pdf
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Publisher Info
Article provided by Finnish Economic Association in its journal Finnish Economic Papers.

Volume (Year): 22 (2009)
Issue (Month): 1 (Spring)
Pages: 3-8
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Handle: RePEc:fep:journl:v:22:y:2009:i:1:p:2-8

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Web page: http://www.taloustieteellinenyhdistys.fi
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Find related papers by JEL classification:
H74 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Borrowing
H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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  1. Poterba, James M, 1996. "Budget Institutions and Fiscal Policy in the U.S. States," American Economic Review, American Economic Association, vol. 86(2), pages 395-400, May. [Downloadable!] (restricted)
    Other versions:
  2. Schultz, Christian & Sjostrom, Tomas, 2001. "Local public goods, debt and migration," Journal of Public Economics, Elsevier, vol. 80(2), pages 313-337, May. [Downloadable!] (restricted)
    Other versions:
  3. Myers, Gordon M., 1990. "Optimality, free mobility, and the regional authority in a federation," Journal of Public Economics, Elsevier, vol. 43(1), pages 107-121, October. [Downloadable!] (restricted)
  4. von Hagen, Jurgen, 1991. "A note on the empirical effectiveness of formal fiscal restraints," Journal of Public Economics, Elsevier, vol. 44(2), pages 199-210, March. [Downloadable!] (restricted)
    Other versions:
  5. Henning Bohn & Robert P. Inman, . "Balanced Budget Rules and Public Deficits: Evidence from the U.S. States (Reprint 060)," Rodney L. White Center for Financial Research Working Papers 10-96, Wharton School Rodney L. White Center for Financial Research.
  6. Barry Eichengreen & Charles Wyplosz, 1998. "The Stability Pact: more than a minor nuisance?," Economic Policy, CEPR, CES, MSH, vol. 13(26), pages 65-113, 04. [Downloadable!] (restricted)
  7. Boadway, Robin, 1982. "On the Method of Taxation and the Provision of Local Public Goods: Comment," American Economic Review, American Economic Association, vol. 72(4), pages 846-51, September. [Downloadable!] (restricted)
  8. DiPasquale, Denise & Glaeser, Edward L., 1999. "Incentives and Social Capital: Are Homeowners Better Citizens?," Journal of Urban Economics, Elsevier, vol. 45(2), pages 354-384, March. [Downloadable!] (restricted)
    Other versions:
  9. Henning Bohn & Robert P. Inman, 1996. "Balanced Budget Rules and Public Deficits: Evidence from the U.S. States," NBER Working Papers 5533, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  10. Poterba, James M, 1994. "State Responses to Fiscal Crises: The Effects of Budgetary Institutions and Politics," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 799-821, August. [Downloadable!] (restricted)
    Other versions:
  11. Mansoorian, Arman & Myers, Gordon M., 1993. "Attachment to home and efficient purchases of population in a fiscal externality economy," Journal of Public Economics, Elsevier, vol. 52(1), pages 117-132, August. [Downloadable!] (restricted)
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