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Mobility, Population Growth, and Public Capital Spending in the United States

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  • Marco Bassetto

    (Federal Reserve Bank of Chicago)

  • Leslie McGranahan

    (Federal Reserve Bank of Chicago)

Abstract

We investigate the relationship between public capital spending and population movements at the state level. We document that gross mobility is positively correlated with capital spending across states and over time within states. We introduce an explicit, dynamic quantitative model of government spending determination, where gross mobility and population growth generate departures from Ricardian equivalence by shifting some costs and benefits of public projects to future state residents. The model is able to account for a large fraction of the correlation in the data. (Copyright: Elsevier)

Suggested Citation

  • Marco Bassetto & Leslie McGranahan, 2021. "Mobility, Population Growth, and Public Capital Spending in the United States," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 41, pages 255-277, July.
    • Handle: RePEc:red:issued:20-27
    DOI: 10.1016/j.red.2021.02.14
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    More about this item

    Keywords

    Public spending; Mobility; Ricardian equivalence; Political-economic equilibrium;
    All these keywords.

    JEL classification:

    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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