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If You Build It, Will They Come?: Fiscal Federalism, Local Provision of Public Tourist Amenities, and the Vision Iowa Fund

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  • Quackenbush, Austin
  • Premkumar, Deepak
  • Artz, Georgeanne M.
  • Orazem, Peter

Abstract

The philosophy of fiscal federalism presumes that local communities will under- or over-provide public amenities in the presence of externalities.� We test this hypothesis using data from Vision Iowa, a state program which provided partial funding to communities to build tourist attractions.� We find a 1% increase in investment increased county taxable retail sales 0.9%.� The State’s return, from program-induced sales tax revenue, averaged 9.2% annually.� Local communities’ returns averaged 0.9% and we find a significant increase in surrounding areas’ sales.� This suggests that without state subsidies, communities would undersupply public amenities aimed at attracting visitors.

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Bibliographic Info

Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 34375.

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Date of creation: 08 Oct 2011
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Publication status: Forthcoming in Review of Regional Studies
Handle: RePEc:isu:genres:34375

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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
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Web page: http://www.econ.iastate.edu
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Keywords: fiscal federalism; local public goods; subsidy; externality; spillover; amenity; retail sales;

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  1. Steven C. Deller & Tsung-Hsiu (Sue) Tsai & David W. Marcouiller & Donald B.K. English, 2001. "The Role of Amenities and Quality of Life In Rural Economic Growth," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(2), pages 352-365.
  2. Alfredo Marvao Pereira & Oriol Roca Sagalés, 2002. "Spillover effects of public capital formation : evidence from the spanish regions," Working Papers wpdea0210, Department of Applied Economics at Universitat Autonoma of Barcelona.
  3. Jeffrey P. Cohen & Catherine Morrison Paul, 2007. "The Impacts Of Transportation Infrastructure On Property Values: A Higher-Order Spatial Econometrics Approach," Journal of Regional Science, Wiley Blackwell, vol. 47(3), pages 457-478.
  4. M. Rose Olfert & Mark D. Partridge, 2010. "Best Practices in Twenty-First-Century Rural Development and Policy," Growth and Change, Gatton College of Business and Economics, University of Kentucky, vol. 41(2), pages 147-164.
  5. Timothy R. Wojan & Dayton M. Lambert & David A. McGranahan, 2007. "Emoting with their feet: Bohemian attraction to creative milieu -super-†," Journal of Economic Geography, Oxford University Press, vol. 7(6), pages 711-736, November.
  6. McGranahan, David A., 1999. "Natural Amenities Drive Rural Population Change," Agricultural Economics Reports 33955, United States Department of Agriculture, Economic Research Service.
  7. Holl, Adelheid, 2004. "Manufacturing location and impacts of road transport infrastructure: empirical evidence from Spain," Regional Science and Urban Economics, Elsevier, vol. 34(3), pages 341-363, May.
  8. Shirley, Chad & Winston, Clifford, 2004. "Firm inventory behavior and the returns from highway infrastructure investments," Journal of Urban Economics, Elsevier, vol. 55(2), pages 398-415, March.
  9. Santiago M. Pinto, 2007. "Tax Competition In The Presence Of Interjurisdictional Externalities: The Case Of Crime Prevention," Journal of Regional Science, Wiley Blackwell, vol. 47(5), pages 897-913.
  10. Mark D. Partridge & Dan S. Rickman & Kamar Ali & M. Rose Olfert, 2008. "The Geographic Diversity of U.S. Nonmetropolitan Growth Dynamics: A Geographically Weighted Regression Approach," Land Economics, University of Wisconsin Press, vol. 84(2), pages 241-266.
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