Public Choice in an Economy with Capitalization: A Dynamic Approach

This essay analyzes the behavior of an imperfectly mobile voter in the presence of property value capitalization. It is shown in a dynamic model that the voter’s ideal public spending level reflects a blend of his own preferences and those of the future occupant of his property. Although the voter does not seek to maximize the value of the property, his behavior cory’irms more closely to this principle the nearer is the date of his departure _from the community or the greater is the chance of early departure when he is uncertain about the future. Finally, the analysis shows under some circumstances that the voters who are liquidity-constrained are more likely to behave as property-value maximizers than those are unconstrained.