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Reciprocal State and Local Airport Spending Spillovers and Symmetric Responses to Cuts and Increases in Federal Airport Grants

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  • Jeffrey P. Cohen

    (University of Hartford)

Abstract

How states and localities react to federal airport grant cuts is a question of increasing importance, especially in light of recent congressional funding reauthorization debates. This study finds that states and localities behave in the way public finance theory predicts. The magnitude of an airport spending change is the same (but in opposite directions) for a cut and an increase in airport grants. Thus, the flypaper effect operates in both directions. Spillovers arising from airport spending are also considered. With the hub and spoke structure of the U.S. air transportation system, a spending increase on airports experiencing major time delays confers spillover benefits on individuals in other states in the form of travel time savings from decreased congestion. These spillovers are reciprocal. There is significant evidence of such interdependencies, and an individual state raises airport spending by between 50 and 60 cents when other states increase airport spending by 1 dollar.

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  • Jeffrey P. Cohen, 2002. "Reciprocal State and Local Airport Spending Spillovers and Symmetric Responses to Cuts and Increases in Federal Airport Grants," Public Finance Review, , vol. 30(1), pages 41-55, January.
    • Handle: RePEc:sae:pubfin:v:30:y:2002:i:1:p:41-55
    DOI: 10.1177/109114210203000103
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    Cited by:

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    2. Phuong Nguyen-Hoang & Yilin Hou, 2014. "Local Fiscal Responses to Procyclical Changes in State Aid," Publius: The Journal of Federalism, CSF Associates Inc., vol. 44(4), pages 587-608.
    3. Chongyu Wang & Jeffrey P. Cohen & John L. Glascock, 2019. "Geographic Proximity and Competition for Scarce Capital: Evidence from U.S. REITs," International Real Estate Review, Global Social Science Institute, vol. 22(4), pages 535-570.
    4. Donald J. Lacombe & Timothy M. Shaughnessy, 2007. "Accounting for Spatial Error Correlation in the 2004 Presidential Popular Vote," Public Finance Review, , vol. 35(4), pages 480-499, July.
    5. Christopher L. Atkinson, 2020. "The Federal Aviation Administration Airport Improvement Program: Who Benefits?," Public Organization Review, Springer, vol. 20(4), pages 789-805, December.
    6. Cohen, Jeffrey P. & Morrison Paul, Catherine J., 2003. "Airport infrastructure spillovers in a network system," Journal of Urban Economics, Elsevier, vol. 54(3), pages 459-473, November.
    7. Cohen, Jeffrey P. & Morrison Paul, Catherine J., 2001. "Hub and Spoke Airport Networks and State Airport Infrastructure Spillovers: A Spatial Econometrics Approach," Working Papers 190900, University of California, Davis, Department of Agricultural and Resource Economics.

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