THE DEBT/TAX CHOICE IN THE FINANCING OF STATE AND LOCAL CAPITAL EXPENDITURES*

ABSTRACT. State and local governments commonly finance investment in public capital by issuing bonds and by using current revenues. This paper presents a model of state and local governments' reliance on borrowing in which the optimal share of debt in the financing of capital investment depends on the relative costs of tax and debt finance. Equations are derived and estimated for spending on public capital and the share of debt in the financing of that spending. The results reveal that the level of private incomes plays an important role in both the capital investment and financial decisions of the jurisdiction. Even after controlling for Sunbelt-Snowbelt differences in incomes, grants, outstanding debt and certain demographic factors, the results indicate that state and local governments located in the Snowbelt rely more heavily on bond issues to finance capital investment. Finally, the estimated invariance of the level of state and local capital investment to the share of debt in the financing of the investment suggests that investment decisions are not greatly affected by factors influencing the willingness to issue bonds.     

SUBURBAN MUNICIPAL EXPENDITURES: THE EFFECTS OF BUSINESS ACTIVITY,FUNCTIONAL RESPONSIBILITY AND REGIONAL CONTEXT*

A wide variety of models exist seeking to explain variation in the level of suburban government activity. Alternative models stress concepts of local stratification and discrimination, the structure of local decision-making, ecological position, and public choice, each of which suggests varying hypotheses about which suburbs spend more and which less. In this paper we summarize and evaluate the relative strength of each of these alternative models, and propose major directions for future research.     

THE ROLE OF INFRASTRUCTURE IN THE SUPPLY OF HOUSING*

ABSTRACT As the housing stock in a city is duplicated, developers must devote greater amounts of resources to the provision of infrastructure. If the production of infrastructure is characterized by decreasing returns to scale, this will cause the price of developable land to increase. The conditions under which an upward-sloping supply curve for housing will result are discussed. Using cross-sectional data for U.S. cities from 1973 to 1982, it is shown that land prices fail to increase with the quantity of construction and that the price elasticity of the supply of housing is infinite.     

MUNICIPAL AMALGAMATION AND THE GROWTH OF THE LOCAL PUBLIC SECTOR IN SWEDEN*

ABSTRACT. The proposition that a decentralized structure of local governments can effectively constrain public sector growth is empirically investigated. Data on Swedish municipal sector size for the 1942–87 period are analyzed within the context of a median voter model. The results indicate that decentralization, measured by the number of units of local government serving a given population, constrains the influence of institutional factors (e.g., rent seeking, bureaucracy) on local budgets as long as these units exceed some minimal threshold size. The findings support the view that communities should be given the flexibility to determine their own ideal pattern of local governments.     

INDUSTRIAL CENTERS AND REGIONAL GROWTH IN THE PRESENCE OF LOCAL INPUTS*

ABSTRACT. A large proportion of regional production takes place in nontraded goods and services. In addition, significant productivity increases can be observed in some segments of this sector. Starting from these two empirical observations we construct a model of growth in a two-region setting with factor mobility. The growth process is based on endogenous technological change in the nontraded input sector, whose output serves as an input in the production of one of the two final goods, the so-called industrial good. We consider two extreme cases, one with locally limited, the other with interregional knowledge spillovers. Conditions are established under which interior solutions with production of local inputs and steady-state growth in both regions result, and others under which we find a core-periphery pattern with growth concentrated in one region only. The stability of the equilibria is discussed by considering the transition processes. Finally, it is shown that catching-up as well as leapfrogging may occur, if new technologies become available.     

DECENTRALIZED TAX COMPETITION FOR BUSINESS CAPITAL AND NATIONAL ECONOMIC EFFICIENCY*

ABSTRACT For a nation composed of independent regions, the effects of local tax competition for business investments are examined. It is first shown that atomistic regional authorities tax only local resources to finance the provision of public services to business. Thus, an efficient interregional equilibrium is induced. Various political/institutional constraints are shown to cause misallocation of the capital stock and an inefficient provision of public services. The characterization of the inefficiency is shown to vary widely, depending upon the constraint under consideration.     

SMALL BUSINESS VIABILITY IN THE URBAN GHETTO*

ABSTRACT Within the minority communities of large SMSAs, neither the black-owned business nor the small nonminority enterprises are flourishing. Facing limited access to financial capital as well as constrained markets, the ghetto firms that do persist are typically quite small in terms of sales and employment. Among black establishments, the least educated entrepreneurs are the ones who are most likely to remain in business. Unless greater financial capital is forthcoming and better educated owners are induced to remain in business, the business community that is located in minority neighborhoods of large urban areas may be destined to stagnate.     

THE DEMAND AND SUPPLY OF CHILD CARE: THE CASE OF THE CITY OF WATERLOO, ONTARIO*

The intention of this paper is to stimulate research on the demand and supply of child care services, an issue that has been largely neglected by geographers, although many of the problems involved lend themselves to geographical analysis. In addition, as the female labour force participation rate, the divorce rate, and the incidence of lone-parent families increase, so do the need for and importance of child care. We review the types of child care available in North America and provide statistics to demonstrate that the supply of child care falls short of demand. Furthermore, for the city of Waterloo, Ontario, through the use of 1981 and 1986 Census data we demonstrate that not only is the supply of licensed day care spaces insufficient to meet the demand, but also it is spatially arranged in a suboptimal way. Through population projections and net migration analyses we demonstrate that the demand for child care spaces in the near future is more likely to intensify in the periphery of the city, where the current supply is nonexistent. We thus argue that locational criteria should play a prominent role in the practice of licensing new day care centres. Cet article vise à encourager la recherche sur I'offre et la demande de services de garderie. Ce sujet a été largement négligé par les géographes měme si beaucoup des pro-blèmes rencontrés sont liés à des facteurs géographiques. De plus, la participation des femmes au marché du travail augmentant ainsi que le taux de divorce et le nombre de families monoparentales, les garderies deviennent de plus en plus nécessaires et importantes. Nous passons en revue les différents types de garderies qu'il est possible de trouver en Amérique du Nord et nous présentons des statistiques démontrant que le nombre actuel de garderies ne satisfait pas la demande. D'autre part, à I'aide des données du recensement canadien de 1981 et 1986 pour la ville de Waterloo, Ontario, nous prouvons que non seulement le nombre de places dans les garderies licenciées est insuffisant mais aussi que leur location géographique n'est pas optimale. À I'aide des études sur la population future et la migration nette, nous démontrons que la demande de garderies augmentera vraisemblablement à la périphérie de la ville où les garderies sont actuellement inexistantes. Par conséquent, nous estimons que le critère de localisation doit jouer un rǒle prédominant dans I'octroi des permis d'établissement de nouvelles garderies.     

DEVELOPMENT POLICIES,URBAN UNEMPLOYMENT AND DEFORESTATION: THE ROLE OF INFRASTRUCTURE AND TAX POLICY IN A TWO-SECTOR MODEL*

ABSTRACT. We model an economy of a developing country that produces an exportable manufactured good in an urban sector and a nontradable rural good. Manufacturing faces a fixed wage, which encourages urban unemployment. Changes in cultivated area in the rural sector involve deforestation or reforestation at frontiers. Government taxes to pay for urban infrastructure that assists the manufacturing sector. Increases in urban infrastructure may relieve or exacerbate frontier deforestation but expands manufacturing employment and reduces urban unemployment. Rural transportation improvements exacerbate frontier deforestation but expand employment in the urban manufacturing sector. A larger population, ceteris paribus, widens the rural-urban wage gap and exacerbates deforestation, but may cause manufacturing employment to expand or contract.     

THE LONG-RUN ECONOMIC IMPACTS OF FEDERAL,STATE, AND LOCAL FISCAL POLICIES IN METROPOLITAN AREAS*

ABSTRACT. This paper uses new estimates of metropolitan factor demand and output supply functions to study how federal, state, and local fiscal policies affect metropolitan economies. We illustrate our work with findings for ten metropolitan areas in five states for changes in state corporate income taxes, local property taxes, the federal corporate income tax, an investment tax credit, interest rates, public capital stocks, output prices, and tax and regulatory policies affecting gross wages. It is clear from these simulations that a policy that is nominally the same everywhere will have repercussions that vary widely across regions and cities.     

POSTCOLONIALITY AND THE TWO SITES OF HISTORICITY

This essay examines the two sites of historicity, namely history‐writing and historical agency, and their interrelationship. I borrow the idea of “sites of historicity” from historian Michel‐Rolph Trouillot's Silencing the Past: Power and the Production of History (1995). For the purpose of analyzing how the relationship between the two sites changes with time and context, using Trouillot's theoretical lens, I examine the philosophies of history of Immanuel Kant and G. W. F. Hegel. By citing instances from these two philosophers, I claim that with the rise of nineteenth‐century colonialism, the two sites of historicity became discursively related in a specific way, whereby historical agency came to be predicated on history‐writing. Hence, in contrast to Kant's work, in Hegel's philosophy of history the relationship between the two sites of historicity acquired a decidedly colonialist form. As a result of this predication of historical agency on history‐writing, the alleged lack of historiography of certain cultures began to be considered as a token of their lack of political ability. The essay ends with the suggestion that the postcolonial thinkers and commentators who deal with historiography should challenge the foregoing predication, as it continues to inform contemporary thought concerning historiography.     

THE EFFECTS OF LOCAL TAXES AND PUBLIC SERVICES ON RESIDENTIAL DEVELOPMENT PATTERNS*

ABSTRACT. This paper incorporates an exogenous taxing and service-providing public sector into a dynamic residential land-use model in order to examine how local-government fiscal policies alter the pace and pattern of residential development. The model is used to derive the comparative-dynamic responses to variations in the income, sales, and property taxes and public-service time paths. The results show how tax and expenditure effects systematically depend upon the anticipated relative growth rates in rents to alternative uses and vary across locations within a given urban area as well as across urban areas themselves.     

A FRAMEWORK FOR REGIONAL MODELING AND IMPACT ANALYSIS: AN ANALYSIS OF THE DEMAND FOR ELECTRICITY BY LARGE MUNICIPALITIES IN ONTARIO,CANADA*

ABSTRACT. We propose a mixed fixed and random coefficients framework for regional modeling. The framework allows the presence of both the region-specific effects and commonality of responses across regions. Bayes solutions for estimating parameters of interest and for generating predictions are derived. Within a Bayesian framework a predictive density approach to evaluate the impact of changes is suggested. We apply the methodology to evaluate the impact of new rate structures on Ontario regional demand for electricity.