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MUNICIPAL CONSTRUCTION SPENDING: AN EMPIRICAL EXAMINATION
Author(s) -
HOLTZEAKIN DOUGLAS,
ROSEN HARVEY S.
Publication year - 1993
Publication title -
economics and politics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.822
H-Index - 45
eISSN - 1468-0343
pISSN - 0954-1985
DOI - 10.1111/j.1468-0343.1993.tb00068.x
Subject(s) - empirical examination , public spending , economics , liberian dollar , government spending , government (linguistics) , capital (architecture) , public economics , capital expenditure , microeconomics , local government , finance , actuarial science , market economy , linguistics , philosophy , archaeology , public administration , politics , political science , law , welfare , history
Despite widespread concern and discussion, no consensus exists concerning the causes of the “infrastructure crisis” or its implications for the efficiency of government decision‐making more generally. We investigate several models of the determination of local public capital expenditures. Using Euler equation methods, we cannot reject the hypothesis that construction spending is determined by unconstrained, forward looking municipal planning. Consistent with this result, the stochastic structure of resource flows is an important feature of the determination of construction spending. Only unanticipated changes in a community's resources alter its demand for structures, with an unanticipated increase of one dollar increasing current construction spending by about 5.6 cents.