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

Author

Listed:
  • Alfons J. Weichenrieder

    (Goethe University Frankfurt, Oxford University Centre for Business Taxation, and CESifo)

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.

Suggested Citation

  • Alfons J. Weichenrieder, 2009. "A Note on Local Public Investment and Debt Limitation in a Federation," Finnish Economic Papers, Finnish Economic Association, vol. 22(1), pages 3-8, Spring.
    • Handle: RePEc:fep:journl:v:22:y:2009:i:1:p:2-8
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    File URL: http://www.taloustieteellinenyhdistys.fi/images/stories/fep/fep0901_1.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Alfons J. Weichenrieder & Markus Kerber & Alfons Weichenrieder, 2014. "Private Investors for State Projects: Shadow Budgets or a Necessity?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 67(22), pages 03-08, November.
    2. Marcel Thum & Thomas Fester & Andreas Kappler & Helmut Seitz, 2005. "Öffentliche Infrastruktur und kommunale Finanzen : Gutachten im Auftrag des Bundesministeriums für Verkehr, Bau- und Wohnungswesen und des Bundesamtes für Bauwesen und Raumordnung," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 37.

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    More about this item

    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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