Regional Macroeconomic Outcomes Under Alternative Arrangements for the Financing of Urban Infrastructure
AbstractMany studies have found that the economic benefits from investment in urban infrastructure are substantial. In Australia, much of the responsibility for the provision of urban infrastructure rests with regional governments. Throughout the1990's many of these governments embarked on a program of fiscal restraint, seeking to restore financial positions weakened by exposure to failed government enterprises. A large proportion of this fiscal adjustment appears to have been borne by spending on public infrastructure. Today, regional government policy attention is again focussing on public infrastructure. In spite of the now robust fiscal positions of Australia's regional governments, they remain reluctant to finance infrastructure through debt, and raising the rates of existing taxes is perceived as politically unpopular. Instead, governments are exploring alternative financing instruments, such as developer charges and public-private partnerships. This paper uses a dynamic multi-regional CGE model (MMRF) to evaluate the regional macroeconomic consequences of four methods of financing a program of regional government infrastructure provision. The methods are developer charges, debt, payroll tax and residential rates. We demonstrate that the net gains from a program of urban infrastructure development are quite sensitive to the chosen financing means. The net gains tend to be greatest under rates and debt financing, and least under developer charges.
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Bibliographic InfoPaper provided by Victoria University, Centre of Policy Studies/IMPACT Centre in its series Centre of Policy Studies/IMPACT Centre Working Papers with number g-152.
Date of creation: Jan 2005
Date of revision:
Publication status: Published in Papers in Regional Science, Vol 87(1), March 2008, pp. 3-31.
multi-regional CGE; dynamic CGE; infrastructure finance; regional policy;
Other versions of this item:
- Peter Dixon & James Giesecke & Maurreen Rimmer, 2004. "Regional macroeconomic outcomes under alternative arrangements for the financing of urban infrastructure," ERSA conference papers ersa04p116, European Regional Science Association.
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
- R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies
- R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-08-12 (All new papers)
- NEP-GEO-2006-08-12 (Economic Geography)
- NEP-MAC-2006-08-12 (Macroeconomics)
- NEP-PBE-2006-08-12 (Public Economics)
- NEP-URE-2006-08-12 (Urban & Real Estate Economics)
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