Productive Public Expenditure in a New Economic Geography Model
AbstractWe assess whether and how differences in productive public expenditure impacts on industrial location. Since productive public expenditure and taxation affect in opposite direction industrial location, it is not straightforward that following an increase in productive public expenditure in a region, that region will necessarily enjoy stronger agglomeration. As a major contribution to the literature, we consider jointly two effects arising from public policy: the demand effect and the productivity effect. The interplay of these two effects determines the final impact on the spatial distribution of firms. The result is influenced by the proportion in which tax payers of the two regions contribute to the financing of public expenditure.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 5824.
Date of creation: Apr 2007
Date of revision:
economic geography; public expenditure; footloose capital;
Other versions of this item:
- Pasquale Commendatore & Ingrid Kubin & Carmelo Petraglia, 2008. "Productive Public Expenditure in a New Economic Geography Model," Economie Internationale, CEPII research center, issue 114, pages 133-160.
- F20 - International Economics - - International Factor Movements and International Business - - - General
- H5 - Public Economics - - National Government Expenditures and Related Policies
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-11-24 (All new papers)
- NEP-GEO-2007-11-24 (Economic Geography)
- NEP-PBE-2007-11-24 (Public Economics)
- NEP-URE-2007-11-24 (Urban & Real Estate Economics)
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